Salient to Investors:
15 analysts are bearish for gold prices next week, 6 are bullish and 5 are neutral – the largest proportion of bears since Jan 2010.
Frederique Dubrion at Blue Star Advisors said the Fed’s comments are the last signal for the soft hands that the bull market in gold is ending, since one of the appeals of gold was QE.
Investors are dumping gold because the global money printing has so far failed to spur inflation – expectations for increases in consumer prices, as measured by the break-even rate for 10-yr TIPS reached a 17-month low last week.
Walter de Wet at Standard Bank said the surge in coin and jewelry demand in April may not be repeated to the same extent now. India raised gold import taxes this month. Kitco Metals said physical demand in North America and Europe has dropped 80 percent from April.
The US Mint sold 33,000 ounces of American Eagles so far in June versus 70,000 ounces in May and 209,500 ounces in April, but still predicts that gold and silver coin sales may reach a record in 2013. The Austrian Mint expects “quite good business” in the next couple of months.
Adrian Day at Adrian Day Asset Mgmt said the sell off is overdone, as monetary policy globally remains very accommodative.
Bullion’s 14-day relative strength index was at 27.4, below the level of 30 that indicates to some analysts who study technical charts that a rebound may be imminent. The measure last settled below 30 on May 17, before prices rose as much as 6.4 percent in the following three weeks.
UBS said gold may drop to $1,250 in a month. Ric Deverell at Credit Suisse said prices will fall to $1,100 in a year. Nouriel Roubini at NYU has forecast a decline toward $1,000 by 2015.
Tom Pugh at Capital Economics said there is definitely a bearish sentiment in the market following the Fed outlook, while the weak Chinese PMI is not so damaging for agricultural markets as it is for things like industrial metals.
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