Thursday, June 27, 2013
Gold: prices have tumbled in recent days as a number of bearish factors have combined. Particularly worrisome for bulls is that investor liquidation remains significant; Stanchart expect further price weakness in the short term as the market searches for a floor. Several positive factors that Stanchart highlighted, that prices should reach a floor soon: i) Producers remain reluctant to hedge for now; ii) High-cost producers are under severe pressure to cut output in places such as Australia; iii) Central banks have continued to buy; From a technical perspective, gold still looks weak. The drop below previous support around USD1,320/oz potentially targets USD1,160/oz, with congestion support expected just above this at ~USD1,170/oz. Stanchart expect prices to regain ground in Q3 on supply cuts and short covering.