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Collapse in gold prices

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04/15/2013 | 06:22pm

Prices of gold has dropped in few sessions at its lowest level since the beginning of the summer of 2011 and continues to collapse at the start of this week in the image of all raw materials, particularly the silver. A strong return of appetite for risky assets but also a review of the estimates of several major banks tipped the general opinion to the detriment of precious metals.

The high prices of precious metals always aroused some questions for several months and confidence renewal in the global economy encouraged financial operators to stay away. Thus, gold, which had skyrocketed for a decade, seemed to have lost its popularity in recent months.
Last Wednesday, an analysis from Goldman Sachs made investors to move away from gold. The U.S. bank advised its customers to "begin to adopt" a short position in gold, that is to say, betting on its fall.

The gold market had not experienced such a decrease for over a year, the ounce lost nearly $ 50 in less than one hour. A sudden plunge that dragged the metal in the 1,525 dollars long-term major area , triggering a massive sell orders that extends this morning in Asia. The activity was intense: according to Bloomberg, negotiations of fixed-contracts on gold Friday afternoon were more than twice higher than the average of 100 days. CME Group, the U.S. derivatives exchange, noted that trade had been temporarily suspended in early trading session as falling prices caused a short circuit.

Technically, the situation is sharply deteriorated and a strong bearish momentum took shape following the rupture of the crucial area of 1530 dollars.
In our previous analysis we were bearish in the short term. !The breakdown of this psychological threshold has resulted in a major consolidation towards our first target of 1425/1450 dollars. Most aggressive investors will close their positions in this area to open new short positions on rebound to target a further decline towards 1325 dollars in the coming months.

GOLD : Collapse in gold prices

Rodolphe Steffan
© Zonebourse.com 2013
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Gold Technical Analysis Chart | MarketScreener