Gold: Time for a breather?
A couple of articles with somewhat bearish implications for gold prices:
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- Consider the latest readings of the Hulbert Gold Newsletter Sentiment Index (HGNSI), which reflects the average recommended exposure to the gold market among a subset of short-term gold timing newsletters tracked by the Hulbert Financial Digest. As of Wednesday’s close of trading, the HGNSI stood at 42.9%.
- This isn’t the kind of reaction you’d expect if the rally of the past three weeks was the beginning of a longer-term rally with significantly more upside potential. As contrarians are fond of saying, bull markets like to climb a wall of worry. And what we’ve seen for much of March would be better characterized as jumping on a bullish bandwagon.
- Gold Declines on Weaker Investor Demand for Haven; Silver Drops
- Gold fell for the first day this week on speculation that a crisis over 15 U.K. sailors and marines held in Iran could be resolved, diminishing demand for gold from investors seeking a haven. Silver also declined.
- When stocks go down, gold goes up. When stocks tumble, everything tumbles.
I wrote previously about the plans to launch several gold ETFs in India, and whether that marked a short-term top. Note that the second ETF to be launched - UTI Gold ETF - raised only Rs. 200 crores versus expectations of Rs. 1000 crores; this in turn has delayed the launch of other ETFs.
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