Gold’s Safe Haven Appeal Paradoxically Missing on Uncertain Outlook
(eToro Blog) Although there are generally expectations of more easing from the European Central Bank and possibly the U.S. Federal Reserve given the worsening global growth outlook, gold bulls can’t wait for that to happen. Yesterday, gold prices fell hard dropping more than $35 per ounce in futures trade to sell at one point at $1595.50, the lowest price since early January. Analysts expect that the downtrend could continue and that the gains of 2012 have already been erased and prices back where they were at the start of the year.
Quite a few traders were caught flatfooted by the price drop, and many are taking advantage of it to bargain shop, as sentiment among OpenBook’s gold traders is overwhelmingly bullish. Some traders who are traditionally gold bulls saw which way the momentum was headed and quickly opened short positions to capture the anticipated fall. OpenBook guru negociosrc was one of those, with a short closed at its TP with a 15.77% profit. Of the two shorts positions opened earlier, one is already showing a small profit.
For OpenBook trader staplehurst from the U.K., a short position closed earlier today provided him with a 66.75% return and helped to propel his weekly and quarterly statistics into positive territory with a profit of 32.8% and 31.7%, respectively. One open short is currently showing a 3.28% gain.
One precious metals analyst says that the situation in the Eurozone is the primary catalyst, and while uncertainty generally sends investors to the safe havens, an anti-inflationary sentiment is being fueled. The economic recovery that looked to have begun in earnest earlier in the year has now basically stalled, and the central banks are maintaining a watch-and-see stance and that says analyst is propagating deflation. And on the whole, it is all equates as a bearish sentiment for gold, and some analysts are looking at the mid or even low $1500s as a possibility.
Copyright 2012 eToro BlogNote: Past performance is not an indication of future results. This post is not investment advice. CFD trading bears risk to your capital.