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why gold is down
It's been a tumultuous couple of months for the yellow metal, which has investors asking: Are gold prices near a bottom?
There's hope this price plunge is ending.
Year-to-date, gold is lower by 17%. But after seven trading sessions where gold prices slumped, on Monday June gold futures gained 1.4%, or $19.40, to $1,384.10. Contract prices bounced as much as 2.4% after sliding 2.1%.
Now technical analysis points to a rebound in the yellow metal to $1,500 in June, following the "double bottom" hit Monday.
A double bottom involves three moves: a drop, a rebound, and another drop to the previous low. Chart watchers deem the pattern as bullish. A classic double bottom reversal typically marks an intermediate or long term change in trend.
"This shows that gold is probably ready to climb," Matthew Schilling, a commodity broker at Chicago based R.J. O'Brien told Bloomberg News. "The reversal was proof that we have found a bottom."
In just 10 minutes Monday, in the wake of gold's rally, holdings in exchange-traded products backed by gold soared by $1.7 billion.
Fueling the buying were comments from Moody's that a downgrade of U.S. debt is likely if the government fails to get its finances in order in 2013.
To get more info, we asked Morning Morning Global Resource Specialist Peter Krauth if he thought a gold-price bottom was near.
"I thing gold is somewhat oversold," Krauth said. "Yesterday's price action, when gold shot up by about $40 within four hours seems to reflect the thinking that it's due for a bounce."
Krauth said this year's gold price correction was expected.
"After a 12-year bull market with no true correction like that in 1974-1976 time frame, one more is due. I would not be surprised to see gold eventually correct a bit further before making a final bottom.
"That being said, if it were to turn up and stay above $1,550, then it's likely this correction would be over," he continued.
Gold investors are just not feeling the love, once again left to wonder why gold prices are going down.
The yellow metal dipped again Thursday, with gold for June delivery ending down $10 at $1,386.10 an ounce. It was the sixth consecutive trading day of declines and marked a four-week low for the metal.
With equity markets continuing to log record highs, and economic data showing some signs of improvement, safe haven gold looks nothing like its moniker.
Fueling gold's recent rout is not one thing; it's a combination of things.
Here's why gold prices are going down this week.
Gold and silver are taking it on the chin again today - leading many readers to keep asking me why gold is going down, and how long the plunge will last.
Gold futures today (Monday) logged their biggest decline since the 1980s, falling $140.30, or 9.3%, to $1,361.10.
What's up? Or rather, what's down?
On Friday, I went into a few reasons why gold is going down to provide some understanding of the action.
But with still further weakness, I'd like to delve in a little more, without repeating myself.
Why Gold is Down
You see, general markets are selling off today too, and even oil has lost $6 per barrel since Thursday.
Though off slightly, the U.S. dollar has maintained strength, probably thanks to speculation the U.S. Federal Reserve may end its quantitative easing sooner than previously expected. That hurts commodities which are all priced in U.S. dollars.
There's also been a considerable amount of selling of gold exchange-traded fund holdings, which has forced those ETF managers to sell their physical bullion. That has temporarily added supply to the market, which helps push gold's price down.