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Gold Crush

April 22, 2013

Although several prognosticators have heralded this as the end of gold's decade-plus bull market, we view it as a correction.
-Dan Denbow, assistant vice president of equity portfolios, USAA Investments  

 

What has caused the sharp decline in gold prices?

  • Recent statements from the Federal Open Market Committee minutes have shown increasing signs that quantitative easing may end earlier than expected.
  • Speculative positioning in gold futures has declined rapidly, indicating selling pressures from fast-money types of investors, such as hedge funds.
  • News last week that Cyprus plans to liquidate a portion of its gold positions has worried investors that further selling from European banks could pressure prices further.
  • Important technical levels have been broken; prices have pierced through psychologically important levels such as $1,500 an ounce.
  • Investors have become more confident in a sustained economic recovery in the United States.
  • The U.S. dollar has shown recent signs of strength.

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