Salient to Investors:

Gold traders are divided on the outlook for prices, as gold is poised for the biggest quarterly drop in at least 9 decades after investors cut bullion holdings to a 3-year low.

Thorsten Polleit at Degussa Goldhandel said we are already at distressed prices really oversold, but a lot of strategic buyers are taking advantage of current prices.

Jeffrey Lacker at FRB of Richmond said the Fed is not close to reducing its balance sheet and he expects 2 more years of sluggish growth.

Joni Teves at UBS while physical demand is not as strong as in April, buyers in Asia are taking advantage of lower prices in bits and pieces. Teves said weaker demand in India because of government restrictions on imports contrasts with decent consumption in China.

Gold’s 14-day relative-strength index is below the level that indicates to some chartists that a rebound may be imminent.

Trading gold using the 14-day RSI would have given investors the second-biggest loss in 2013, after a buy-and-hold strategy, among 23 technical analysis tools.

Analysts at banks from Morgan Stanley to Credit Suisse to Goldman Sachs trimmed gold forecasts.

 Morgan Stanley says waning investor interest has turned more serious amid a clearer outlook for QE tapering and predicts $1,150 in 12 months.

Jonathan Bouchet at Delman said it is a crowd exit and everybody is deeply fearful of how low it can go, and while gold will never go to $500, it can drop another leg.

The US Mint sold 47,000 ounces of American Eagles so far in June, 70,000 ounces in May and 209,500 ounces in April.

Daniel Briesemann at Commerzbank said an increasing dollar, rising bond yields, falling equity markets and concerns about China’s banking system was a poison cocktail not only for gold, but for other commodities. Briesemann said the price fall for base metals is exaggerated, and is confident the economy will improve in half2 and lead to higher prices.

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