Sell-Off In Gold Is Not Over Yet
Last Friday, gold had its biggest drop in one day since December of 2013. This happened after a better than expected jobs report for February was published and the expectations that the Fed will raise interest rates sooner rather than later are only higher now. According to analysts, the sell-off in gold is not finished yet.
Howie Lee, investment analyst at Philip Futures, said that the fact that gold had a great start to the year is now a distant memory. It was a false start it seems, as the yellow precious metal is now trading at 1,200 dollars per ounce again, coming from 1,300.
Gold Sell-Off
Gold is in the red ink year-to-date and it does not seem like the downward trend has ended already, says Lee. With the Fed inching closer to raising interest rates, no amount of ‘buying-on-dips’ will suffice to save gold. Lee is looking at a price target for the year of 1,100 dollars.
Last Friday the precious metal dropped almost 3 percent to 1,164 dollars in one day, which is also the lowest level in 3 years.
With a strong US dollar and not too many signs of inflationary pressure in the near future, it seems like the worst case scenario is playing out for gold in the eyes of Ric Spooner, chief market analyst at CMC Markets. Often when such a big drop occurs, it is not the end of the story. If you are thinking about buying, you might want to wait until the market calms down.
The 1,131 dollar per ounce level from November will be a very important level to keep an eye on, says Spooner. If we stay above that level, the outlook is stable or bullish. If we dive below it, the long-term bears come into play and we might go to 1,000 dollars per ounce.
Disclosure: None.