DAR Wong: Gold Forecast in March

KUCHING (March 13): On March 8, spot gold prices reached US$2,070 per ounce that was last seen in August 2020. Market has formed a double top formation and yellow metal retreated to US$2,000 per ounce benchmark again.

By technical analysis, most traders will assume the double formation has been created and will act as a strong resistance. Hence, it will be no surprise to see many common traders will begin to adopt short-strategy in late March. However, we beg to differ and would like to share our opinion below.

First of all, the current Ukraine warfare has fueled a strong and rapid inflation into the global commodity prices. Unless the war ceases fire tomorrow, we foresee the stoking prices will continue to flare in March to April period.

From fundamental records, Russia is one of the major exporters of natural gas, crude and commercial metals to Europe and Central Asia. Through the war crisis, this will indirectly affect the shipping and freight cost in coming months that will affect food prices.

As gold is the popular safe haven whenever there is a crisis in the world, the recent sell-down in global stock markets and bond prices has pushed the flight of fund into yellow metal very quickly. Thus, it will be unrealistic to conclude the gold prices have reached a temporary top at US$2,070 per ounce due to the ongoing war fires in Ukraine.

On the WTI crude oil, the market has reached 13-year high when the demand charged above US$130 per barrel on March 9. Some market analysts predict the prices may reach US$150 per barrel very soon in wake of the war fight. Others even call for US$300 per barrel in case Russia plans to manipulate the output in addition to the sanction by western countries.

In late March, we reckon the gold prices will be well supported at US$1,960 per ounce if there is a drawdown. In fact, the yellow metal should not break beneath US$1,960 per ounce if the bulls aim to ascend again.

Hence, the overall range is expected to be contained from US$1,960 to US$2,060 per ounce for coming weeks. Bear in mind that piercing above US$2,070 per ounce anytime due to unexpected catalysts from the Russia-Ukraine crisis might spiral a new demand in market to reach US$2,100 per ounce level.

When that happens, be ready to see US$2,250 to US$2,300 per ounce as our next top.

Dar Wong is a professional in security and futures industry for more than 30 years. He is a financial advisor based in Singapore. The opinions are solely at his own. He can be reached at dar@bainpm.com.

Source: The Borneo Post