Salient to Investors:
Money managers reduced their net-long position in gold to the lowest since June 2007, while shorts climbed to the second-highest on record.
ETP holdings are at a 3-year low. Banks from Goldman to Credit Suisse cut their gold forecasts last week.
Mark Luschini at Janney Montgomery Scott said the things that supported gold have begun to crack, while worries about inflation have disappeared and macroeconomic risks diminish.
Goldman Sachs expects gold prices to drop to $1,050 by the end of 2014 as the Fed tapers and investors sell ETP holdings
Ric Deverell at Credit Suisse said gold’s declines are shattering investors’ confidence and expects $1,150 in 12 months, and lowered its 2014 outlook by 16 percent the same day, citing waning demand for haven assets.
Martin Murenbeeld at DundeeWealth said even if the Fed slows asset buying, countries including Japan and China may continue to stimulate their economies, boosting demand for gold as a hedge against inflation. Murenbeeld said gold is in a mid-cycle correction, but the fundamentals for higher prices are intact.
Cameron Brandt at EPFR Global said money managers pulled $2 billion from gold funds last week while total outflows from commodity funds were $2.68 billion.
Goldman Sachs cut its outlook for copper saying slowing economic growth in China will crimp consumption and supplies will outpace demand through 2016.
Jeff Sica at Sica Wealth Mgmt said a slowdown in China, plus rising supplies, does not augur well for commodities – we are in an era of lower commodity prices.
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