gold set to challenge $418 by year's end -barclays

  1. SCD
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    Gold set to challenge $418 by year's end -Barclays
    Monday September 22, 7:06 am ET

    LONDON, Sept 22 (Reuters) - Investment bank Barclays Capital said on Monday gold prices could hit $418 an ounce by the end of the year as unprecedented speculative long positions on the U.S. futures market power the metal through highs last seen in 1996.

    "After a six-month period of consolidation, we believe a springboard has been built that is capable of propelling gold to $401 an ounce and possibly even to $418," technical analyst Phil Roberts said in the bank's quarterly Commodity Refiner research report.

    At 0930 GMT bullion dealers fixed the morning London spot reference at $386.20. Prices were last above $400 an ounce in March 1996, shortly after setting a 13-year high of $417.70.

    "With the uptrend accelerating, the risk is the rally happens sooner rather than later, i.e. before the end of the year," he said.

    Net speculative positions reached 12.3 million ounces long on New York's Comex futures exchange on September 2 -- the highest since electronic records began in 1983, the report said.

    "The statistics are stunning," wrote Matt Schwab, Barclays' head of precious metal trading. "... However, the narrow base on which gold's strong recent price performance has been built suggest that the market will struggle to move much higher unless gold's appeal as an alternative investment can be broadened."

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