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Sept. 20, 2010, 12:40 a.m. EDT

Gold futures climb as much as $4 on Globex
Prices due for a correction before next leg up, analyst says
By Myra P. Saefong, MarketWatch
TOKYO (MarketWatch) -- Gold futures climbed by as much as $4 an ounce on Globex during Asia?s afternoon trading Monday, adding to last week?s 2.5% gain as investment demand for the precious metal continued to strengthen.

In recent dealings, gold for December delivery climbed $2.80 to $1,280.30 an ounce in electronic trading on Globex, after tapping a high of $1,281.70.


News Hub: Gold Futures Hit Third Record HighDow Jones Newswires Columnist Mike Casey explains why gold and silver prices still flirt with record levels despite zero core inflation.
Futures prices reached a fresh settlement high of $1,277.50 an ounce in New York Friday, after touching an intraday high of $1,284.40 in electronic trading. Read Friday?s Metals Stocks column.

At the moment, there is a ?lack of major news to prevent a sell off in gold,? said Chintan Karnani, chief analyst at Insignia Consultants in New Delhi, referring to gold?s current price rise as ?too much money chasing too few goods.?

?Investors are invested in gold ... and they are not exiting their gold investments,? he said, pointing out that ?fundamental gold is bearish as there is no demand, but gold has now become a paper asset.?


?Technically overbought conditions exist [in the gold market and a] correction of $50-$60 should happen anytime before the next leg higher to $1,376.?



Chintan Karnani, Insignia Consultants

But ?technically overbought conditions exist? in the gold market and ?a correction of $50-$60 should happen anytime before the next leg higher to $1,376,? Karnani said.

He expects gold to fall in the first two weeks of October, then rise.

He warned, however, that ?if gold continues to rise in October or nears $1,500, then it will be in a bubble zone. Unless gold has a small correction to $1,220 by mid-October, gains will be unsustainable in the medium term to long term.?