Gold's break above $1,400 an ounce on Monday for the first time since June 7, and a bullish "cup and handle" chart pattern, suggest more gains are in store for the precious metal that may have bottomed out two months ago, technical analysts said.
"There is a very high likelihood that we saw the near-term low on June 28, the last day of second quarter, as many big investors capitulated," said Adam Sarhan, chief executive of Sarhan Capital, referring to a final wave of selling at the market's bottom before prices rose again.
After touching $1,406 per ounce briefly on Monday morning, bullion has recovered over $200 since the end of June when prices hit three-year lows of $1,180 amid talk that funds were being forced to sell to meet client redemptions.
Hedge fund managers, including gold bull John Paulson, sold stakes in SPDR Gold Trust, the world's biggest gold-backed exchange-traded fund, in the second quarter, betting that the Federal Reserve would end its stimulus program as the world's No. 1 economy improved.
Spot gold was up 0.6 percent to $1,404. U.S. gold futures for December delivery settled $2.70 lower at $1,393.10, but rose to $1,404 in after-hours trading.
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