Gold, once the darling in the investment world, is losing its luster, and exchange traded funds that track the precious metal could continue to weaken, with large banks anticipating further declines in the bullion market.
After touching $1,251 per ounce Wednesday, Bank of America Merrill Lynch was stopped out of their long positions, reports Myra P. Saefong for MarketWatch.
MacNeil Curry, technical strategist at BofA Merrill Lynch, said that its previous bullish view on gold has been “proven incorrect” and that there is greater weakness than anticipated.
“While allowing for a near-term consolidation, the $1,270 pivot should limit the topside before the yellow metal declines towards the June lows at $1,180,” Curry said in the MarketWatch article.
Curry argues that bears will have to see a “break of $1,155/$1,087 support to confirm a long-term top and secular turn in trend from bullish to bearish.”
COMEX gold futures were down 1.0% Thursday, trading around $1,245.1 per ounce.
Looking ahead, Goldman Sachs Group projects gold prices could decline at least 15% to $1,050 at the end of next year due to increased downside risk, reports Phoebe Sedgman for Bloomberg. Goldman Sachs analyst Jeffrey Currie calls gold a “slam dnk” sell for next year as the U.S. recovery extends next year. [Global Gold Demand Plunges As Investors Dump ETFs]
Physically backed gold ETFs include:
- SPDR Gold Shares (NYSEArca: GLD): down 25.9% year-to-date
- iShares Gold Trust (NYSEArca: IAU): down 25.9% year-to-date
- ETFS Physical Swiss Gold Shares (NYSEArca: SGOL): down 25.9% year-to-date
- ETFS Physical Asian Gold Shares (NYSEArca: AGOL): down 24.5% year-to-date
SPDR Gold Shares
For more information on gold, visit our gold category.
Max Chen contributed to this article.
Full disclosure: Tom Lydon’s clients own GLD.