Gold Trading Opportunity:
Bloomberg report today that Goldman has cut its 2013 gold estimate to $1,545 an ounce from $1,610, trimmed its 2014 forecast to $1,350 from $1,490, and set year-end targets of $1,450 in 2013 and $1,270 in 2014.
The Goldman report is intended for traders. The analysts recommend starting a short Comex gold position, targeting $1,450 with a stop at $1,650.’ Bloomberg quote further from the report:
‘Futures averaged a record $1,671 last year and the 12 straight annual gains in London were the best run in at least nine decades. Bullion will fall to $1,375 by the end of the year as a U.S. recovery leads to rising interest rates, Societe Generale said in the April 2 report. Credit Suisse Group AG cut its 2013 estimate by 9.2 percent to $1,580 a day later.
Barclays Plc, Credit Suisse, Societe Generale, Danske Bank A/S (DANSKE) and BNP Paribas SA are among banks predicting lower average prices in 2014 than this year. While Deutsche Bank lowered its 2013 gold forecast to $1,637 yesterday, it still expects prices to average $1,810 next year. Bullion futures climbed to an all- time high of $1,923.70 in September 2011.
Holdings in exchange-traded products have shrunk 7.6 percent this year, compared with gains in silver, platinum and palladium, data compiled by Bloomberg show. They were 2,432.3 tons yesterday, compared with an all-time high of 2,632.5 tons in December. Speculators held a net-long gold position of 47,164 contracts in the week ended April 2, down 76 percent from October, U.S. Commodity Futures Trading Commission data show.
“We believe a sharp rebound in gold prices is unlikely,” Goldman said. “The fall in prices could end up being faster and larger than our forecast, as aggregate speculative net long positions across Comex futures and gold ETFs remain near record highs.”
Fundamentals affecting gold:
The points Goldman and other analysts make are well observed . Previous postings in this blog have also alerted readers to Jeffrey Christian’s forecasts for the price of gold to fall as low as $1400 before recovering. However there are also fundamentals that could re-ignite demand for gold to consider.
In a bid to avert a euro crisis that could damage the single currency and the European Union George Soros was in Germany yesterday with a proposal for Eurobonds . And, while we respect Goldman’s analysis and support for traders, on the key fundamental issues we are guided by what George Soros has to say. And, when he sounds the alarm on Europe, shorting gold might not be the smartest idea.
Before leaving for Germany, in an interview conducted in Hong Kong Soros also made the point that investors were disenchanted with gold as it hadn’t done well during the euro crisis. But he didn’t expect the price to crash as central banks were buying gold and would continue to.
I also subscribe to the Roubini Monitor. Their lead article this morning addressed increasing anxiety in Germany over risks with Italy – a subject highlighted and extensively canvassed in recent postings in this blog.
In an Investors Chronicle interview last September I was asked for my views on gold in the event of a euro crisis· I responded it would be a catastrophe and gold is catastrophe insurance.
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