Back
15 Apr 2013
Forex Flash: Where's the low in gold? - Nomura
Nomura strategists Saeed Amen and Geoffrey Kendrick have taken a look at recent price action and ask, “Where´s the low in gold?”
They start by noting that Friday´s move in gold saw it trading at prices not seen in July 2011, falling over 4%, helped by the move through key technical levels such as $1535, which has been a key support around May 2012. They question they ask is whether the move lower is done. They think before declaring the move done, they need to see gold ETF holdings head back higher, which has not occurred for weeks. Another factor is likely to be how Asia reacts. In the past few weeks, price action during Asian hours has been fairly neutral. Once these factors do turn, they would be more comfortable in saying a low has been reached. They add, “From a longer-term perspective, we have previously acknowledged the decline in tail risks associated with the eurozone has reduced the tail risk appeal of gold. However, the low rate environment has remained intact and should be supportive over the longer term.”
They start by noting that Friday´s move in gold saw it trading at prices not seen in July 2011, falling over 4%, helped by the move through key technical levels such as $1535, which has been a key support around May 2012. They question they ask is whether the move lower is done. They think before declaring the move done, they need to see gold ETF holdings head back higher, which has not occurred for weeks. Another factor is likely to be how Asia reacts. In the past few weeks, price action during Asian hours has been fairly neutral. Once these factors do turn, they would be more comfortable in saying a low has been reached. They add, “From a longer-term perspective, we have previously acknowledged the decline in tail risks associated with the eurozone has reduced the tail risk appeal of gold. However, the low rate environment has remained intact and should be supportive over the longer term.”