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Gold Futures Surge Higher 15 Sep 2010

December gold futures on Globex surged higher yesterday ending the gold trading session as a wide spread up candle and finally breaking above the high of $1270 per ounce set back in late June for the precious metal.  This breakout has been widely anticipated (not least by yours truly) although it has been attributed to buying by central banks.  Nevertheless from a technical perspective yesterday’s price action further extends the strong rally in gold futures of late July and August and given that we are now into new high ground the only question is how high and how long this rally will last.  Yesterday’s breakout has moved the technical picture into a new region as we now have an extremely strong and solid platform of support to extend the price even further and, in the medium to longer term, we should be looking at $1500 per ounce as a minimum by the year end, and perhaps $2000 per ounce by 2012.  In today’s early trading the gold futures contract has pulled back marginally, opening up with a small gap down to trade at time of writing at $1271.20.  With all three short term moving averages pointing sharply higher there is nothing to suggest, on the daily chart, that this rally is coming to an end any time soon.

Gold gains as central banks stock up