Gold has great potential but oil looks a lot better - Moor Analytics
(Kitco News) - The gold market still has a lot of potential for higher prices. Still, commodity investors might want to turn their attention to other markets that are seeing stronger momentum, according to one technical analyst.
In a recent interview with Kitco News, Michael Moor, creator of Moor Analytics, said that he sees more potential for higher oil prices than gold. He added that after two months of gains, the gold market is looking technically exhausted is due for a correction.
"We basically broke below a couple of different formations last week, and that's what made the push down to $1,855," he said.
Meanwhile, Moor added that crude oil has managed to hold above critical support and is just starting a more extensive run. He said that he has been bullish on oil since July 2020, after prices rebounded from falling into negative territory for the first time in history. He said that there is a potential for oil prices to double as it trades above $56 a barrel.
"We are just at the start of the move that I expect will take us to $110 a barrel," he said. "It's not going to happen in the next month, but I see another $50 move in oil in the next eight to 12 months."
Moor's crude oil outlook comes as prices push above $70 a barrel. July West Texas Intermediate crude oil prices last traded at $72.07 a barrel, up 1.70% on the day.
Moor said that the first significant resistance point he is watching is around $77.25 a barrel.
"That is a major resistance point, but that is not to say that the price will roll over from there," he said.
Looking at the gold market, Moore said that he remains long-term bullish on the precious metal, but he also warns investors of a short-term correction. He added that he is currently neutral on gold as prices test support around $1,850 an ounce.
Moor said the next major support levels come in at $1,830 and then $1,816 an ounce if current support doesn't hold.
"For this to be a short-term bearish correction, we really need to hold $1,830," he said.
If gold prices move below $1,800, Moor said that the market would face a much deeper correction that could push prices back to $1,673 an ounce.
"But if the gold price does not roll over and keeps heading higher, we could easily see $2,000 without a problem by the end of the year," he said.
Moor added that he could see gold prices push to $2,192 or even $2,312 as those are the following major exhaustion levels if current support holds.
He noted that when momentum picks up in gold, the market can be nearly unstoppable. He explained that last year gold price rallied from below $1,500 an ounce in March to hit a record high above $2,000 five months later.