2:31pm: Goldman Sachs says it's time to bet against gold as bullion's rally to the highest level in a year isn't justified, backing the bearish call with a comment from a former US leader in a report that was issued, appropriately enough, on Presidents' Day.
Gold will slump back to $US1100 an ounce in three months and $US1000 an ounce in 12 months, analysts wrote.
It was headlined with a remark from former president Franklin Roosevelt: there's "nothing to fear but fear itself", channelling comments from Roosevelt's 1933 inauguration when the US economy was being ravaged by the Great Depression.
"It's time to sell the fear barometer," the bank said, and recommended shorting gold.
Gold jumped to the highest since February 2015 last week as sinking equity markets, weaker oil prices, and diminished bets for higher US borrowing costs spurred haven demand. Prices were further boosted by the spread of negative interest rates and concerns about a crisis in Europe's banks.
Goldman said it still expected rates to rise, putting the odds of US recession at just 15 to 20 per cent, and rejected the notion that a re-run of the crisis was likely.
"We believe that these new fears, like past fears, are not justified," the analysts wrote. "Systemic risks stemming from the collapse in oil and commodity prices are extremely small."
Spot gold has dropped as much as 1.2 per cent to $US1194.90 an ounce in Asian trade and is currently trading at $US1197.10. It's down from $US1263.48 last week, the highest price since February 2015.
Goldman's targets for bullion are the same as those given by the bank in a note last week, when it said that US rates will still rise.
smh.com.au
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Panda, I don't understand how that trade cost an arm and a leg if you are trend trading? Using sensible money management, it should have been just a blip on your capital and dependent on where you are hiding your stop. If you can't take that loss then why are you trend trading?
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