Gold bugs are not closing out 2011 on a positive note. Futures continue their negative trend, down a third of percent in overnight trading. If this price action holds overnight, gold prices are extremely close to correction territory, off nearly 9% in less than a month.
The decline in gold can be attributed to better than expected economic numbers emerging from the US. It should be noted that this is not slowing down physical gold purchases on a local level. Those continue at a brisk pace as the average investor looks to hedge against the possibility of QE3. There is also their fear of an economic collapse that plays into their purchasing habits.
Other precious metals dropped with gold with silver leading the decline. Silver prices continue their march below the $30 threshold. Palladium is also dropping nearly half a percent in overnight futures trading. Learn Options Trading The Easy Way
The DXY’s strengthening has also played a role in the price declines of precious metals. A strengthening dollar nearly always has an adverse impact on the metal.
While the trend for gold has become negative in the past few weeks it should pick up when traders return from a long holiday. It is not like Europe has been fixed and the US government situation is dysfunctional at best. The likelihood of further monetary easing is still there as the US inches closer to the 2012 election cycle. Definitely a space for traders to watch in the coming weeks.
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