The last time the precious metal was flirting with $1,550 was when it hit $1,562.30 on July 12. It then went on to reach a high of $1,888.70 on Aug. 22, as fearful investors fled from aftershocks of the U.S. debt downgrade.
The spike sparked speculation that the safe-haven commodity could breach the near-mythical $2,000-an-ounce threshold.
Those fantasies are now kaput, according to analysts — at least for the foreseeable future. The triple threat of a strong dollar, austerity programs in Europe and an overload of bullish investors has resulted in a “disconcertingly bearish concoction,” according to commodities analyst Dennis Gartman.
“Anybody who is long is under duress, anybody who is short is in control,” Gartman said of the gold situation. “There is something very serious going on.”
Throw into the mix the light volumes that are common during year-end trading and “it’s hard to tell what’s really going on this week,” said Matt Zeman, a metals trader with Kingsview Financial.
“It gets really goofy,” he said. “But the chart for gold doesn’t look healthy.”
Investors also tested gold’s $1,550 floor last week before the price briefly rebounded. But Zeman said the continuing downward pressure could eventually spark a sell-off of the metal.
“We may see it break wide open,” he said. “The best place to be in the gold market right now is on the sidelines.”
— Tiffany Hsu
Photo: AP Photo / Sotheby's