Gold has 3rd straight decline
Gold tumbled Monday to its lowest price in more than two months as traders fled the metal, dashing hopes for another run soon to the $1,000 mark.
Near-term gold futures in New York slumped $24.10, or 2.7%, to $871.50 an ounce, the cheapest price since Jan. 22.
Some analysts attributed the sell-off to a further unraveling of the “fear trade” that briefly helped drive gold above $1,000 in February. In theory, investors’ growing sense of hope about an economic recovery in the second half of the year -- as signaled by the stock market’s rebound -- is reducing the appetite for havens including gold and Treasury securities.
Economic optimism in recent weeks has lifted oil and many other commodities as well as the stock market. Gold, the odd man out, has tanked in the last three sessions.
Short-term momentum players were in control Monday, said Joel Crane, a metals strategist at Deutsche Bank in New York. He said some traders were driven out after gold sank through its 100-day moving average price, a key technical level for chart watchers.
He believes the metal could rally again in the next few months. For one, demand for Indian gold jewelry, a crucial element in the market, has dived this year but could revive with the latest drop in prices and with a big national festival coming up later this month.
But Crane sees the price fading again by year’s end, to around $850 an ounce.
Despite rising fears that the Federal Reserve’s massive dump of money into the financial system will stoke serious inflation down the road, Crane believes that gold’s fans are too optimistic about a huge segment of the population turning to precious metals to protect themselves against inflation.
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