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  1. #1
    Junior Member

    Gold sinks below $1,200 for first time in nearly 3 years !!!

    Gold sank 2 percent on Thursday, as month-end book squaring and relentless liquidation by institutional investors sent bullion prices below USD 1,200 per ounce for the first time in nearly three years.

    Gold reversed early gains in New York trade, and the slide accelerated with stop-loss orders triggered after the price fell below USD 1,225 an ounce.

    Gold has slid nearly USD 200 an ounce in 10 days. It is down more than 28 percent for the year and is headed for a 25 percent loss for the second quarter, its biggest quarterly decline since at least 1968.

    Thursday's slide came despite gains in other precious metals and commodities, including crude oil, and even as the benchmark 10-year US Treasury yield fell below 2.5 percent. Falling yields for Treasuries usually encourage buying of gold, which pays no interest.

    Analysts cited forced liquidations of gold unrelated to market fundamentals, and quarter-end selling by funds polishing portfolios through the time-honored practice of window dressing.

    "You don't want to catch a falling knife, so people who might be buyers are stepping aside and don't want to show gold at their quarter-end statement," said Axel Merk, chief investment officer at Merk Funds which oversee about $500 million in mutual fund assets.

    Spot gold was down 2.1 percent to USD 1,199.51 an ounce by 4:07 p.m. EDT (2001 GMT). Its session low of USD 1,197.1 an ounce was its lowest since Aug 12 2010.

    U.S. Comex gold futures for August delivery settled down USD 18.2 at USD 1,211.6 an ounce. Trading volume was 270,000 lots, heavier than its 30-day average of 214,000, preliminary Reuters data showed.

    Read more: http://www.amazines.com/article_deta...icleid=5809938

  2. #2
    Legendry Member Michael Hodges's Avatar
    I really think that gold could go much lower now. The drop is not something that is going to inspire the average investor to buy even if the price is really good now. Monday could bring another volatile week for gold. I am going to treat any rallies as selling opportunities.

  3. #3
    Specialist Member runneroption's Avatar
    Quote Originally Posted by Michael Hodges View Post
    I really think that gold could go much lower now. The drop is not something that is going to inspire the average investor to buy even if the price is really good now. Monday could bring another volatile week for gold. I am going to treat any rallies as selling opportunities.
    Totally agree with you Michael. Even at these low levels Gold could go even lower in short to medium term. This is mostly due to the lag in the investors perception. They are now totally feared by the decline, the same way as they were ecstatic about the rise in 2011. It will take time to make them change their minds and to start buying again.

  4. #4
    Legendry Member Michael Hodges's Avatar
    Quote Originally Posted by runneroption View Post
    Totally agree with you Michael. Even at these low levels Gold could go even lower in short to medium term. This is mostly due to the lag in the investors perception. They are now totally feared by the decline, the same way as they were ecstatic about the rise in 2011. It will take time to make them change their minds and to start buying again.
    I couldn't agree more. gold prices may be perfect but try telling that to the average Joe on the street who only knows that gold has been dropping like a rock. Monday could be a big down day again....we'll have to wait and see...

  5. #5
    Specialist Member TAllen1429's Avatar
    Quote Originally Posted by Michael Hodges View Post
    I couldn't agree more. gold prices may be perfect but try telling that to the average Joe on the street who only knows that gold has been dropping like a rock. Monday could be a big down day again....we'll have to wait and see...
    Gold was well on course to register its worst quarterly performance since the late 1960s on Friday as the Fed's pending plans to curtail its asset purchasing program are reducing gold's hedging appeal against inflation.

    Assuming this statement has some validity, then gold looks poised to weaken considerably further. What do you think, Michael, runneroption?

  6. #6
    Specialist Member runneroption's Avatar
    Quote Originally Posted by TAllen1429 View Post
    Gold was well on course to register its worst quarterly performance since the late 1960s on Friday as the Fed's pending plans to curtail its asset purchasing program are reducing gold's hedging appeal against inflation.

    Assuming this statement has some validity, then gold looks poised to weaken considerably further. What do you think, Michael, runneroption?
    Hi Terry,

    There is some truth in your ideas, but they are largely based on the asumption that the Fed will decrease its bond buying activity and this will cause presure on the inflation targets. There is no clear Fed decission yet, even no clear plan when this process will start and even will it start or not. If it continue the inflation target of 2% will be reached sooner or latter and even passed much higher, which will lead to gold buying. The only scenario when gold could decline more is some kind of deflationary pressure wiht zero percentage inflation but it is not very probable for now. That’s why I am seeing these levels 1200-1300$ per ounce as good buying oportunity. I don’t think the price could go much further south. Even if 1100$ is possible it is very small downside risk as compared to the upside potential. I am still wating to see whant will be the price action in the next couple of days. If it confirms the idea of strong support I will buy monthly options bellow 1300$.

  7. #7
    Legendry Member Michael Hodges's Avatar
    All things aside and returning to pure technical analysis I see significant risk in gold to the $1100 level. This pop is just another relief rally on the way down, in my opinion.

    One thought I just had went like this .... If the equity markets are looking good and looking better, attracting new buyers and new money it could attract folks to be sellers of other investments such as gold in order to raise cash to buy stocks. . . thoughts on this anyone?

  8. #8
    Master Member vinayakm's Avatar
    Quote Originally Posted by Michael Hodges View Post
    All things aside and returning to pure technical analysis I see significant risk in gold to the $1100 level. This pop is just another relief rally on the way down, in my opinion.

    One thought I just had went like this .... If the equity markets are looking good and looking better, attracting new buyers and new money it could attract folks to be sellers of other investments such as gold in order to raise cash to buy stocks. . . thoughts on this anyone?
    I'd like to add some fundamentals here:

    The issues in China are heavily impacting commodities. The Shanghai Composite declined as much as 18% after posting a high back in February. The slowing growth in China is not the only problem as there is also a liquidity crisis. We are talking about the world's second largest economy and the also the second largest consumer of gold in the world here. Any problems will bring down worldwide commodity prices and global demand will keep tanking.

    Even India has been having slow growth. It is investors in the US and Europe that aggressively invest in stocks when the markets are up as opposed to people in India who view gold as a primary way of saving. With the lesser demand from India and China, and the sell off in the US and EU, your point makes a lot of sense Michael Hodges.

    I happen to agree, wholeheartedly.

  9. #9
    Legendry Member Michael Hodges's Avatar
    Quote Originally Posted by vinayakm View Post
    I'd like to add some fundamentals here:

    The issues in China are heavily impacting commodities. The Shanghai Composite declined as much as 18% after posting a high back in February. The slowing growth in China is not the only problem as there is also a liquidity crisis. We are talking about the world's second largest economy and the also the second largest consumer of gold in the world here. Any problems will bring down worldwide commodity prices and global demand will keep tanking.

    Even India has been having slow growth. It is investors in the US and Europe that aggressively invest in stocks when the markets are up as opposed to people in India who view gold as a primary way of saving. With the lesser demand from India and China, and the sell off in the US and EU, your point makes a lot of sense Michael Hodges.

    I happen to agree, wholeheartedly.
    Awesome addition V! I don't follow gold closely enough, apparently you do. China is a problem for the whole world and not just on comodity prices. Even with what information we get there is really no way to really know what is going on there. Slowing growth, credit and housing bubbles in China could be the trigger for the next bear market.

  10. #10
    Legendry Member milos's Avatar
    Many investors think that gold would be continued to fall below $1050 per ounce in next few years.

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