Gold: Falling knife in perfect storm with significant headwinds

Gold: Falling knife in perfect storm with significant headwindsAnalysts and reporters (guilty as charged) are struggling for the right metaphor to describe the recent drop in the gold price.

The selloff in gold is set to deepen as the dollar will probably extend gains, according to ABN Amro NV, which forecast that the precious metal may end this year at $1,100 an ounce and finish 2015 at $800.

“Don’t try to catch a falling knife,” analyst Georgette Boele wrote in an e-mailed report received today. “The U.S. dollar rally has further to run, especially if the Fed turns more hawkish this year.”
via Bloomberg.


Nature and the weather are always a reliable sources to describe market movements and you can expect the use of the phrase "a sea of red" to pop up in an article about gold stocks any time soon. Or perhaps stocks will be falling off a cliff into a sea of red.

"The prospect of firmer rates, coupled with our expectation for a stronger dollar, present significant headwinds for gold," said Suki Cooper, precious metals analyst at Barclays Capital.

"If anything, you might have expected gold to have fallen further, given the perfect storm of events that are negative for the gold price," Capital Economics analyst Caroline Bain said.
via Reuters

Hurricanes have also been mentioned in relation to gold.

First prize must goes to the Barron's blog which last week headlined a piece Gold, Miners Buried Under Waves of Selling following a "downdraft" in the price.

At least no-one is warning of a gold price tsunami. Not yet anyway.

Image by BostonBill