Gold futures may rebound to $1,500 an ounce in June after hitting a “double bottom” yesterday, according to technical analysis by R.J. O’Brien & Associates.
The price may climb 8.4 percent from yesterday’s settlement after touching $1,336.30, a month after slumping to a two-year low of $1,321.50 on April 16, said Matthew Schilling, a commodity broker at R.J. O’Brien in Chicago. A double bottom is a chart pattern showing a drop, a rebound and then another decline approaching the previous low, usually indicating support.
“This shows that gold is probably ready to climb,” Schilling said in a telephone interview from Chicago. “The reversal was proof that we have found a bottom.”
On April 15, gold plunged 9.3 percent, the most in 33 years. A session earlier, the price slumped into a bear market as some investors lost faith in the metal as a store of value amid economic optimism, low inflation and a rally in equities.
Yesterday, gold futures for June delivery rose 1.4 percent to settle at $1,384.10 on the Comex in New York. The price gained as much as 2.4 percent after slumping 2.1 percent. Holdings in exchange-traded products backed by gold surged by $1.7 billion in 10 minutes as futures rallied.