Along with the rise in gold prices that almost reached 2,000 U.S. dollars per troy ounce (31.1 grams), some people think gold prices will be corrected as investors will realize the benefits.
- Michael Cuggino
Gold prices rose too fast in recent weeks. Gold investors often say that gold prices will be corrected quite deeply, and said the price achieved is currently above fair value.
They do not mean to say gold prices have turned into a decline, but recommended investors take profits. Especially after the price of this precious metal reached above 1900 U.S. dollars per troy ounce Thursday for the first time.
The price of gold in the spot market fell 3 percent at the close Thursday. A decrease of 3 percent was the biggest daily drop for one and a half years. While the increase is already more than 400 U.S. dollars since last July.
Independent investor Dennis Gartman who had forecast the price of gold will go up long ago, says it has reduced the purchase of gold. "Probably the best step now is to reduce the purchase rather than buy more gold, it seems prudent step," he said.
In a note last Thursday from UBS Strategic Metals Edel Tully warned of the risk increase due to the CME Group, which manages several transact futures gold contract gold transactions increase margins by 22 percent beginning this August.
Investors are switching from the stock market continued to sag into the gold market because of fear about debt in Europe and the U.S. on the brink of recession. The fund managers say, gold continues to be hunted because of expectations of monetary easing in the U.S.. In contrast, the price of gold will be released if the U.S. central bank governor Ben Bernanke does not announce anything new about the stimulus program of bond purchases.
"It's possible investors are buying at the time heard the rumor and sell on the rumor becomes news," said Michael Cuggino, portfolio manager at Permanent Portfolio Funds which manages a fund of 15 billion U.S. dollars.
"The price of gold fluctuates greatly, can drop up to 100 U.S. dollars, up 200 dollars in the blink of an eye," she said. Analysts said that if there is no quantitative easing phase 3 (bond purchase program to restore the economy).
Mark Luschini Head of Investment Strategy at Janney Montgomery Scott in gold prices tend to be corrected because it traded above U.S. $ 400 average price of 200 days Salama. That is, the price of gold was too expensive. "From the technical side, I think it's good old cash in gold," he said.
