And reported by this Bloomberg article, that’s precisely what has happened. Momentum and algorithms based on technical levels can surely take gold down another 100 bucks from here but that too will present a buying opportunity.
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“Last week, many websites completely or partly closed down their informal financing business for stock investment”, wrote Vincent Chan, analyst at Credit Suisse in a research note Monday.
Money managers are holding the smallest net-bullish bet on gold since the US government data begins in 2006.
The selloff spilled over into platinum and palladium.
China has ended years of speculation about its official reserves of gold by revealing over the weekend that its gold holdings have jumped by 60 percent over the past six years to 1,660 tonnes.
The US dollar held broad gains in Asia today as investors looked ahead to higher interest rates from the Federal Reserve, while gold hit 5-year lows as a lack of global inflation left little to hedge against.
Gold headed for the biggest single-day loss in nearly two years and the dollar traded near a three-month high versus the euro as investors switch focus back to the timeline for higher United States borrowing costs. “It was very surprising to see that even the turmoil in Greece and China were not able to lift prices”.
Gold in Singapore, which normally determines price trend on the domestic front, lost 4.2 per cent to $1,086.18 an ounce, the lowest price since March 2010 and silver 2.3 per cent to $14.54 an ounce, the lowest since December 2014.
Rabobank analysts said: “There may again be something Kafkaesque about that recovery given it does not seem to have registered the recent volatility in equities, which anecdotal reports suggest has hit real estate hard”.
HSBC (HSBA) also benefited from positive broker comment, rising 1.1% to 586.8p after Citigroup raised its rating to “buy” from “neutral” and upped its price target to 635p from 625p.
This is a result of the United States Central Bank. “They do appear to leave the door open to further purchases, which should limit the downside for gold.”
Precious metals are not the only commodities impacted.
European markets also made gains, as Greek banks reopened in the first signs of a return to normal after a deal to start talks on a new bailout.
Gold had one of the best bull markets any asset class has seen from 1998 to 2011.
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Options trading shows that a few investors are expecting more declines. “It’s as much to do with the negative fundamental and policy influences on other currencies that’s leading the dollar to be stronger by default”.
