February has been brilliant for gold, and we have another fortnight to go, but can it last? The short answer is “no”, but picking a top when a stampede is on

is not advisable. The reasoning is as follows: over the same period, the dollar index has shed 4.4 per cent of its value, accounting for part of the 13 per cent rally in spot gold. As a ratio to crude oil, currently almost 46 barrels per ounce, it is almost double previous historical peaks. Compared to silver, where the ratio is now 80, it is also stretched. On the daily and weekly bases, it is overbought. So far, it is stalled at the 50 per cent retracement and long-term trend-line resistance. Buyers beware.

Nicole Elliott is a technical analyst

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