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Is the Gold Bull Market Over?

Gold has dropped to an 8 month low, yet most "gold bugs" are still optimistic about the long-term bullish trend.

Prime Values has predicted the gold price crash months before - stirring controversy among the stackers community. Yet, it seems like gold is correcting sharply and appetite for the shiny metal has somewhat gotten dimmed.

Gold has lost its momentum and in the best case it's trading sideways, as the US economy shows concrete signs of improvement, yet QE rounds are continuing.

Major financial institutions have lowered their outlook for gold's price in 2013: Credit Suisse, UBS, Citigroup and Goldman Sachs are all bearish. 1,200 $ seems to be the next limit towards which gold is headed - at least, the vast majority of predictions gave out this number.

Currently gold is still trading sideways with strong resistance around 1,590 - 1,600 $.

It's obvious that nothing can go up forever and that an over 10 year bull market is rather unusual. The current correction is considered "normal" by most experts.

As for small stackers, small investors: those who wanted to buy "some gold" already own it. The thirst for gold has somewhat diminished. (Despite, countries are still hoarding - it's rather the small investors and speculators that have lost the appetite and, the stronger dollar is weakening gold's price, so it's not just a demand-related downturn).

Normally, in order for something to grow constantly, the current momentum will have to be stronger than the preceding one. Otherwise said: gold would have to constantly exceed itself in terms of momentum. Negative economic news, Fed-initiated quantitative easing, worsening global crisis-related news, constantly increasing "hunger" for gold could push it upwards. Most of that is not happening now.

Nevertheless, we are still in a correction period and if gold won't receive positive stimulation (for instance: more or, potentially higher QE rounds, worse US economy news etc.), then it will not grow and eventually will dip lower.

The dollar is currently gaining strength not only because the US economy shows concrete signs of improvement (at least according to some indicators), but also because rival currencies are devaluing more than the dollar: Japan, the UK and the eurozone all face severe economic issues and they too are printing money.

The FOMC's March 19th and 20th meetings will give us signals about whether QE will continue or not. As previously mentioned, there is a possibility of quantitative easing reduction. If that happens, it will push gold's price even lower.

Watch the news and stay tuned to Prime Values' Market Watch in order to receive fresh information about where gold is headed.

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