(Bloomberg) -- Gold may rise to a record, possibly driven higher by weakness in the dollar, should the precious metal first “hold clearly” above $950 an ounce, Mizuho Corporate Bank Ltd. said, citing trading patterns. A rise to more than that level would take gold above a so- called resistance point, according to a note and table yesterday from Nicole Elliott, London-based senior technical analyst at Mizuho. Resistance prices, listed by Elliot in the table, may identify clusters of sell orders.“While we continue to favor an eventual break to new record highs, only when it holds clearly above $950 per ounce will bullish momentum kick in,” she wrote, without giving a timeframe. “This may be due to generalized U.S. dollar weakness, courtesy of U.S. government largesse, rather than renewed appetite for precious metals.”
Gold, which tends to move in the opposite direction to the U.S. currency, reached a record $1,032.70 an ounce on March 17, 2008 and last rose to more than $950 an ounce on March 23. The precious metal traded today at $928.15 an ounce at 2:22 p.m. in Singapore, about 2.3 percent less than the $950 threshold.The Dollar Index, traded through Intercontinental Exchange Inc. to track the U.S. currency against those of six major trading partners, has decreased 8.3 percent since reaching a three-year high on March 4.The U.S. Federal Reserve has lowered rates to close to zero and is buying government and corporate bonds to fight the recession in the world’s largest economy. The policy, known as quantitative easing, increases the supply of money.
Still, “gold bugs are currently two a penny -- always a worrying sign,” Elliott wrote, referring to backers of the precious metal as an investment. “More so when prices are going broadly nowhere and one adds in storage and opportunity costs.”
Bullion has risen 5.5 percent this year as investors’ concern about the health of the global economy and expectations for a build in inflation increased demand for the metal as a store of value.
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