Gold could drop below US$1,000 for first time in 4 years: Goldman Sachs
Gold fell to a five-week low on speculation the Federal Reserve will slow stimulus next week and amid talks on a plan for Syria to surrender its chemical weapons. Silver headed for the biggest weekly drop since June.
Gold futures slid 5.4% this week, the most since June 21, as the threat of an imminent attack on Syria eased. U.S. Secretary of State John Kerry reported a “constructive” start to talks with Russian Foreign Minister Sergei Lavrov, who is seeking an agreement that would make a strike unnecessary.
Bullion fell 22% this year as some investors lost faith in the metal as a store of value and on speculation the Fed will curb stimulus. Policy makers will cut monthly debt purchases to US$75 billion from US$85 billion at the Sept. 17-18 meeting, a Sept. 6 Bloomberg News survey showed. Goldman Sachs Group Inc. said there’s a risk gold may drop below US$1,000 an ounce, a level last reached in 2009.
“The risk premium that was seen in gold seems to be fading now, after tensions with Syria eased,” analysts at Hyderabad, India-based Karvy Comtrade Ltd. wrote Friday in a report. “Expectations that the U.S. Federal Reserve this month may start to unwind its monetary stimulus” will pressure gold in the near term, they said.
Gold for December delivery fell 1.3% to US$1,312.90 by 7:56 a.m. on the Comex in New York. Prices reached US$1,304.60, the lowest since Aug. 9. Futures trading volume was 17% above the average for the past 100 days for this time of day, data compiled by Bloomberg showed. Gold for immediate delivery in London declined 0.6% to US$1,313.34.
Chemical Weapons
The U.S. blames President Bashar al-Assad’s regime for an Aug. 21 chemical-weapons attack that it says killed more than 1,400 people. The diplomatic initiative by Russia has led President Barack Obama to put off moves toward military strikes.
While debt-ceiling discussions in the U.S. and the Syrian crisis may support gold in the near term, prices will resume a decline into 2014, Jeffrey Currie, Goldman’s head of commodities research, said in a Bloomberg Television interview Friday. The metal may fall below the bank’s 2014 target of US$1,050, he said.
“We expect there will be volatility” before the Fed meeting, said David Lennox, a resource analyst at Fat Prophets in Sydney. “Investors are jumping out of the safe haven of gold.”
Business Insider report that Nomura’s Tyler Broda makes the case that the gold rally is over, and that it will be an ugly 2014.
“Gold’s rally in the summer has occurred into rising real yields, suggesting that there is potential for some snapback. However, in our view, gold has now made most of its move, for now. We continue to be bearish on gold for 2014. Our strategists and economists expect real interest rates to increase and market conditions to improve. Persisting gold supply and slumping central bank demand add to the less than constructive fundamental conditions.”
ETP Holdings
Holdings in gold-backed exchange-traded products fell 0.5 metric ton Thursday to 1,947.8 tons, near the three-year low set Aug. 8, data compiled by Bloomberg shows. Assets are heading for a second weekly decline after rising for three weeks through the end of August.
Silver for December delivery fell 1.7% to US$21.77 an ounce in New York, after falling to US$21.42, the lowest since Aug. 14. Prices declined 8.9% this week, the most since June. Platinum for October delivery lost 0.6% to US$1,434.10 an ounce, after reaching US$1,426, the lowest since Aug. 7. Palladium for December delivery rose 0.2% to US$694.10 an ounce.
http://business.financialpost.com
Gold fell to a five-week low on speculation the Federal Reserve will slow stimulus next week and amid talks on a plan for Syria to surrender its chemical weapons. Silver headed for the biggest weekly drop since June.
Gold futures slid 5.4% this week, the most since June 21, as the threat of an imminent attack on Syria eased. U.S. Secretary of State John Kerry reported a “constructive” start to talks with Russian Foreign Minister Sergei Lavrov, who is seeking an agreement that would make a strike unnecessary.
Bullion fell 22% this year as some investors lost faith in the metal as a store of value and on speculation the Fed will curb stimulus. Policy makers will cut monthly debt purchases to US$75 billion from US$85 billion at the Sept. 17-18 meeting, a Sept. 6 Bloomberg News survey showed. Goldman Sachs Group Inc. said there’s a risk gold may drop below US$1,000 an ounce, a level last reached in 2009.
“The risk premium that was seen in gold seems to be fading now, after tensions with Syria eased,” analysts at Hyderabad, India-based Karvy Comtrade Ltd. wrote Friday in a report. “Expectations that the U.S. Federal Reserve this month may start to unwind its monetary stimulus” will pressure gold in the near term, they said.
Gold for December delivery fell 1.3% to US$1,312.90 by 7:56 a.m. on the Comex in New York. Prices reached US$1,304.60, the lowest since Aug. 9. Futures trading volume was 17% above the average for the past 100 days for this time of day, data compiled by Bloomberg showed. Gold for immediate delivery in London declined 0.6% to US$1,313.34.
Chemical Weapons
The U.S. blames President Bashar al-Assad’s regime for an Aug. 21 chemical-weapons attack that it says killed more than 1,400 people. The diplomatic initiative by Russia has led President Barack Obama to put off moves toward military strikes.
While debt-ceiling discussions in the U.S. and the Syrian crisis may support gold in the near term, prices will resume a decline into 2014, Jeffrey Currie, Goldman’s head of commodities research, said in a Bloomberg Television interview Friday. The metal may fall below the bank’s 2014 target of US$1,050, he said.
“We expect there will be volatility” before the Fed meeting, said David Lennox, a resource analyst at Fat Prophets in Sydney. “Investors are jumping out of the safe haven of gold.”
Business Insider report that Nomura’s Tyler Broda makes the case that the gold rally is over, and that it will be an ugly 2014.
“Gold’s rally in the summer has occurred into rising real yields, suggesting that there is potential for some snapback. However, in our view, gold has now made most of its move, for now. We continue to be bearish on gold for 2014. Our strategists and economists expect real interest rates to increase and market conditions to improve. Persisting gold supply and slumping central bank demand add to the less than constructive fundamental conditions.”
ETP Holdings
Holdings in gold-backed exchange-traded products fell 0.5 metric ton Thursday to 1,947.8 tons, near the three-year low set Aug. 8, data compiled by Bloomberg shows. Assets are heading for a second weekly decline after rising for three weeks through the end of August.
Silver for December delivery fell 1.7% to US$21.77 an ounce in New York, after falling to US$21.42, the lowest since Aug. 14. Prices declined 8.9% this week, the most since June. Platinum for October delivery lost 0.6% to US$1,434.10 an ounce, after reaching US$1,426, the lowest since Aug. 7. Palladium for December delivery rose 0.2% to US$694.10 an ounce.
http://business.financialpost.com