Traders aren’t waiting around to find out—over the past two weeks, stocks in the S&P 500 are down over 4 percent , gold is down about 6 percent.
“What’s your downside? Flat is not a bad position to be in,” says Kevin Grady, gold trader at Phoenix Futures & Options. “People didn’t run to gold this time because the price couldn’t get through $1,700 an ounce,” he says implying that investor demand may have peaked for the moment.
Below the market, Grady sees support near $1,523 an ounce but has his eye on two potential catalysts: demand from China and Fed Chairman Ben Bernanke . Grady says that any talk of another round of easing aka QE3 could keep interest rates low and put a fire under the price of gold adding, the growing number of “shorts” in August gold futures means that any turn to the upside could be “fast and furious."
Barclays commodities analyst Suki Cooper paints a similar picture and writes,“Although our base case is for Greece to remain within the EUR, the strength of the USD has further hindered gold as it behaves in line with risky assets and U.S. treasuries benefit instead. The responsive physical buying that materialised last year from key markets—India and China—has become lacklustre.”Page 2 of 3 | Prev Page | Next Page