Salient to Investors:
Jeff Currie and Damien Courvalin at Goldman Sachs says:
- The selloff in gold was sparked by investor concern that European governments may have to follow Cyprus in selling part of their holdings, and exacerbated by the drop below a key technical-support level at $1,530, and then below the 200-week moving average of $1,434.
- Goldman is sticking with its price forecasts and sell recommendation.
- The selloff will continue.
Peter Richardson at Morgan Stanley said the market was starting to price in the prospect that members of the eurozone other than Cyprus might be forced to sell gold to raise funds.
Central banks hold 19 percent of all gold ever mined. The US and Germany are the biggest holders, accounting for more than 70 percent of their reserves.
Dominic Schnider at UBS said gold’s slump caught everybody by surprise and was driven by concern that the Fed may taper its stimulus program, technical factors and comments from Draghi.
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