Since February, silver has dropped steadily from more than $35 an ounce
to just over $26. Although many analysts are expecting bullion prices
to excel over the coming years, some are scratching their heads at the
sudden drop in silver.
Its precious metals companion, gold, has also seen a significant decline
in its value. Upon analysis of the charts, gold bullion reached an
astounding $1,921 in September of last year, but it has fallen to just
under $1,600 since then.
Are reports
of deflation in the United States economy triggering a slowdown in
bullion prices? Is a stronger United States dollar also keeping a lid
on bullion prices from reaching further success as precious metals have
since the year 2000?
The latest technical analysis
from ScotiaMocatta, part of Scotiabank Global Banking and Markets,
suggests that if silver bullion falls to $26 then it could potentially
begin liquidation and fall to $18 an ounce.
“We believe a break of $26.00 has the ability to trigger liquidation of
silver with it looking for $18.00,” wrote the bullion bank in its
report.
According to the analysis, this could be a much bigger picture for a dip in gold prices.
“The broader picture suggests gold could move a bit lower, but it will
stay in this range until we see definitively whether the bulls will be
right about the printing presses at central banks ramping up again, or
whether they will hold fire until the world gets a lot worse," said
Macquarie analyst Hayden Atkins.
India, one of the largest buyers of bullion, especially gold, has been hurt by a terrible monsoon season as well as a weakened Rupee currency.
This has led the Indian government to keep its bullion purchases flat.
Also, demand for bullion in several of the key Asian markets has
remained levelled.
“South East Asian players have been doing well at picking up the slack
but of late they have not,” stated Standard Bank in a note from its
commodities strategists.
One analyst said the fear of inflation is over and there will be most
likely a pullback from bullion and a jump into U.S. Treasuries.
“There is zero inflation out there.
With gold being well received as a
risk asset, the price is deflated because of the rising dollar,” said
Phillip Streible, senior commodities broker at futures brokerage R.J.
O'Brien, in an interview with Reuters.
Nevertheless, despite the drop in prices, some banks remain certain that
bullion will soar once again.
The Royal Bank of Scotland told Bloomberg News (via the Globe and Mail) Friday that gold will climb to $1,800 by the fourth quarter, but then sink once again.
“From there, we reiterate our view that this move will be a 'last
hurrah' for gold," the bank said. "We continue to see a downtrend
commence from that point, which should see gold gradually fade to
average $1,200 an ounce by 2015."
In the morning trading session, silver was up 0.26 percent to $26.74USD and gold also saw a 0.32 jump to $1,572USD.
View Source
Comments
Post a Comment