Gold technicals point to $1,250 price – reports
A technical note from Bank of America suggests that gold could drop to $1,250 – its lowest level since the third quarter of 2010.
According to news agency Bloomberg, the forecast is based on a so-called ‘symmetrical triangle’, and comes after the precious metal has lost some 17% so far this year.
Bloomberg quoted MacNeil Curry chief of rates and currencies technical strategist at Bank of America stating that the triangle is formed of two existing data sets including the two-year low price of $1,321.95 seen on 16 April this year, and the rebound to $1,488.1 seen in the first few days of May.
Meanwhile, Reuters has reported on the decision by rating agency S&P to upgrade its outlook for the US economy has been hurting gold.
This is because an improving US economy would see the Federal Reserve end its QE programme, which has an inflationary effect. Gold is seen as a hedge against inflation, as well as being sought out as a safehaven asset during the financial crisis.
The spike in demand for physical gold in Asia, which followed the previous sharp fall in the price of gold in April this year, has abated, according to anecdotal reports from bullion traders. This would remove a short-term prop to the physical price.