Don’t read too much into gold’s drop
By Myra Saefong
August 24, 2011
If gold was actually in a bubble, has that bubble popped? It’s a question some traders are asking today with gold GC1Z dropping by as much as $97 an ounce, or over 5%, but it’s probably safer not to read too much into the metal’s decline.
Kitco Metals analyst Jon Nadler on Tuesday argued that speculators were turning gold into a risky bet, even as other analysts were chiming in with predictions for gold at $2,000 – or even $3,000 an ounce.
But Austin Kiddle, an analyst at London-based bullion brokers Sharps Pixley, said Wednesday that the current downward movement in gold is “more in line with profit taking than a move out of safe-haven territory,” especially given that next month is a big month for gold as the Indian wedding season begins.
“There will still be buying on the dips that should support gold (in some fashion), and we will be lead by some factors in the next few days (U.S. Jobless data and Jackson Hole) which will give a clearer direction on the price of gold,” he said, but “at the moment, it’s watch and wait.”