Gold: Year-end selling may drive bullish to bearish

(Commodity Online): Year-end activities may be weighing on Gold prices and the recent weakness does not necessarily reflect underlying fundamentals, said HSBC in a research note.

Recent activities of gold stated the statement is true, on Wednesday Comex Feb Gold prices reached 1565.7 an ounce, its lowest level since October 2011 and broke through support at the 200 day moving average, the first time below that level since January 2009.

According to the bank, some macro hedge funds are selling gold holdings and taking profits after a difficult year, the year-end is often a hit with low volume and buyers may be hesitant to buy at this time.

However, the bank noted since ETF buyers remain constant, this could bode well longer-term. Also, the drop in price could unearth some physical demand. Indian demand has been slowed by a weak domestic currency and a slowdown in economic growth.

The break under $1,650 could offset rupee weakness and spur demand. Chinese demand may also support Gold prices, the bank adds, citing a 50% jump year-over-year in gold purchases from Hong Kong during October.

“The resumption of the gold rally, though, may have to wait until after New Year’s, until year-end buying is done. It is not logical, in our view, to call an end to the bull market while prospects for EM remain positive and ETF holdings remain firm,” HSBC concluded.

Tags: Gold analysis, Gold future prices, Gold futures, Gold investment, Gold news, Gold price, gold price forecast, Gold prices, price of gold, Spot gold, Spot gold price

Posted by admin on Dec 15 2011. Filed under Gold predictions. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry