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27 Jun 2013
Flash: Gold closer to end of the fall than beginning - Nomura
FXstreet.com (Barcelona) - The recent fall in gold prices post-FOMC has coincided with the rise in US yields, making the sell-off even more aggressive, and with further weakness likely, says Saeed Amen, FX Strategist at Nomura.
Amen refers to a turn in the fate of gold ETF holdings as a first initial signal that may suggest the end of weakness, something that has yet to occur: "So far gold ETF holdings have been falling since February and have actually accelerated, adding to short-term bearishness" Amen said.
On the positive side, Amen sees that "once the dip becomes large enough, we would expect Asian physical buyers to come in and support the gold price." But since gold remains vulnerable along Asian hours - note yesterday's fall - the physical buying that may assist gold is still not happening, Amen add.
On a longer-term perspective, Amen reads the cheaper gold over recent months as a sign that the pricing of the FOMC normalisation policy is partly done. Due to this discount in prices, the Nomura Strategist thinks "gold is closer to the end of the fall in gold prices than the beginning." However, Amen admits that any rebound in gold longer term "is likely to be relatively small because of the change in dynamics following the FOMC meeting."
Amen refers to a turn in the fate of gold ETF holdings as a first initial signal that may suggest the end of weakness, something that has yet to occur: "So far gold ETF holdings have been falling since February and have actually accelerated, adding to short-term bearishness" Amen said.
On the positive side, Amen sees that "once the dip becomes large enough, we would expect Asian physical buyers to come in and support the gold price." But since gold remains vulnerable along Asian hours - note yesterday's fall - the physical buying that may assist gold is still not happening, Amen add.
On a longer-term perspective, Amen reads the cheaper gold over recent months as a sign that the pricing of the FOMC normalisation policy is partly done. Due to this discount in prices, the Nomura Strategist thinks "gold is closer to the end of the fall in gold prices than the beginning." However, Amen admits that any rebound in gold longer term "is likely to be relatively small because of the change in dynamics following the FOMC meeting."