Gold gives signals of giving up bull run
Gold's biggest rout in three months means traders are the least bullish since July and Dennis Gartman, the economist who sold the last of his metal on the day the slump began, warned of further declines.business Updated: Dec 18, 2011 20:37 IST
Gold's biggest rout in three months means traders are the least bullish since July and Dennis Gartman, the economist who sold the last of his metal on the day the slump began, warned of further declines.
Analysts expect the metal to gain next week, the lowest proportion since July 29. While bullion's slide of as much as 9% this week took its drop from the record $1,924 an ounce in September to almost 20%, the common definition of a bear market, investors are still holding on to the metal.
"Bears are in the driver seat," said Miguel Perez- Santalla, vice-president of sales at Heraeus Precious Metals Management in New York, whose clients include jewellers and mining companies. "But the problems in Europe have not been solved and buying will come back and we will see higher prices."
Bullion rose 12% to $1,593 an ounce this year on the Comex in New York. Even after this week's rout, it's still the third-best performer in the S&P's GSCI gauge of 24 commodities, which fell 2.6%.
Traders were witnessing the "death of a bull" and "the beginnings of a real bear market that may drive prices as low as $1,475," said Gartman.
While gold is heading for an 11th consecutive annual gain, this week's declines mean it is also poised for its first quarterly drop in three years. Gold may drop below $1,500 an ounce in the "short term," said Daniel Briesemann, an analyst at Commerzbank in Frankfurt, who is forecasting an average of $1,800 next year. "Gold is not a safe haven at the moment."
(In exclusive partnership with The Washington Post)