Gold exchange traded funds have been losing their luster this year, and traders may not see prices turn around anytime soon as gold futures breach a key technical level.
According to Commerzbank AG, gold prices dipped below $1,234 Monday, one of the levels singled out in Fibonacci analysis, reports Nicholas Larkin for Bloomberg. [Gold ETFs Under Pressure; Banks See More Pain]
“Gold is starting to erode its 78.6 percent retracement and is starting to erode the end-of-November low,” Karen Jones, an analysts at Commerzbank, said in the article. “Where it closes today will be key. If you close below the 78.6 percent retracement it means that the pressure’s back on the downside and likely to retest support at the July 5 low of about $1,208 and the June 28 low at $1,180.”
Fibonacci analysis suggests that prices tend to drop or rise by certain percentages, or the “golden ratio,” after touching a high or low.
Gold prices are moving toward their first annual decline in 13 years as investors pulled out on speculation the Fed will cut back on accommodative measures and fueled the equities rally.
COMEX gold futures declined 2.1% Monday, trading around $1,224 per ounce.