“Our view is that unless the metal is able to establish immediate support around the $1,500 level (we would set the odds of this occurring around 50/50) the metal would be likely to travel a long way downwards before it finds the bottom of the current decline,” Shaoul said in the article. “Potential targets for a deep downside move would include $1,300, which would be a 50% retracement of the 2008-11 rally.” [Gold ETF Lowest Since 2011 as Key Support May Crumble]
Investors have been picking up gold as a hedge for the inevitable spike in inflation due to the Fed’s loose monetary policies. However, wholesale producer prices actually dipped 0.6% in March, sending gold futures lower Friday, reports Beth Belton for USA Today. Year-over-year, wholesale inflation increased 1.1%.
Additionally, some are attributing the lower gold prices to central bank actions in Europe, especially with Cyprus potentially dumping its gold holdings to raise cash.
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Max Chen contributed to this article.
Full disclosure: Tom Lydon’s clients own GLD.