Bloomberg Survey Paints Pessimistic Future for Gold

The problem for gold isn’t just that prices are dropping. For many, the metal also has lost its charisma.
Sentiment means a lot in the bullion market, where only about 60 percent of what gets mined or recycled each year is used in jewelry and industrial applications. The rest is sold as coins or bars, so when demand from investors dries up, there can be painful consequences for the bulls who remain.

Prices will drop to $984 an ounce before January, according to the average estimate in a Bloomberg News survey of 16 analysts and traders. That would be the lowest since 2009 and a 10 percent retreat from Tuesday’s settlement. Speculators are shorting the metal for the first time since U.S. government data began in 2006, and holders of exchange-traded products are selling at the fastest pace in two years.

“Gold is out of fashion like flared trousers: no one wants it,” said Robin Bhar, an analyst at Societe Generale SA in London. “It’s not going to collapse, but we think it is going to be at a lower level in the not-too-distant future.”

After drifting lower for most of 2015, gold tumbled in July, heading for the biggest monthly decline in two years after slumping to the lowest since February 2010. The retreat shows how the metal has lost its appeal as a commodity and as an alternative to currencies, according to Macquarie Group Ltd. Futures in New York traded at $1,090.90 at 10 a.m. on Wednesday, down 0.5 percent from a day earlier.

via Bloomberg

Content is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Business Information & Services, Inc. or any of its affiliates, subsidiaries, officers or directors. If you would like to reproduce or redistribute any of the content found on MarketPulse, an award winning forex, commodities and global indices analysis and news site service produced by OANDA Business Information & Services, Inc., please access the RSS feed or contact us at info@marketpulse.com. Visit https://www.marketpulse.com/ to find out more about the beat of the global markets. © 2023 OANDA Business Information & Services Inc.