Previously we’ve discussed the historical accuracy of investment
bank Goldman Sachs when it comes to making
commodity price predictions, particularly oil and gold. Goldman made a high profile bearish call on
gold a few weeks ago, a prediction which proved to be spot on. On Tuesday, Goldman reversed its bearish gold stance in the short
term. That’s potentially good news for
the gold market, at least in the near term.
According to CNBC, the firm’s commodities research team said the
decline in gold was “more rapid than it expected,” and it exited the trade with
a potential gain of 10.4 percent, below its original target price of
$1,450.
Goldman had previously forecast that gold would close out 2013 at
$1,450 per ounce, then take a hit in 2014 with a predicted close of
$1,270. Within days of that call, gold
fell almost 16 percent to a low of $1,321 an ounce. As CNBC pointed out, “While the bailout of
Cyprus did not send gold higher, reports that Cyprus would sell gold to cover
its shortfall sent the metal tumbling, as traders bet other European countries
might also sell gold to raise cash.”
Goldman said the surprisingly rapid decline was probably
accelerated by breaks in “well-flagged technical support levels.” With the investment bank no longer on the
short side of gold, the yellow metal has another reason for establishing a low
in the coming days and weeks.
1 comment:
GS was not able to manipulate gold as low as it wanted because of mass purchase from Asia, especially from China. It is reported that Chinese old ladies have purchased more than 300 tons of physical gold in the last 1-2 weeks. So it is really ridiculous to use tiny Cyprus gold reserve as pretence for manipulation.
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