However, other analysts think the factors that drove gold’s historic rally are still in place.
The metal’s price has been extremely sensitive to speculation on the Federal Reserve’s quantitative easing program, notes Jeffrey Nichols, senior economic advisor to Rosland Capital.
“Indeed, gold registered its biggest one-day gain of the year on Tuesday as Federal Reserve Board Chairman Ben Bernanke, in his semi-annual report to Congress, eased market fears of an early reversal in the central bank’s super-stimulative monetary policy,” he said in a recent note.
Nichols thinks a still-weak economy, uncertainty over tax and spending policies, and political gridlock in Washington will put pressure on Bernanke’s Fed to “maintain – and possibly even step up – its on-going program of quantitative easing and extremely low interest rates.”
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Full disclosure: Tom Lydon’s clients own GLD.