After an unnerving $45 fall on Wednesday, gold is trying to build support around $1,570 an ounce.
At these levels gold is down more than $330 from the all-time high above $1,900 an ounce set in August 2011.
The yellow metal is also getting dangerously close to straying into bear territory – officially defined as a 20% pullback. Wednesday afternoon gold briefly touched $1,555 – that's an 18.5% retreat from the record high.
Here is a roundup of some of the reasons why gold's "long up cycle from 2001 to the present is very likely hitting an inflection point":
- The largest ETF, SPDR Gold Trust (GLD), is on track for its biggest outflow since August 2011
- Hedge funds and banks have been liquidating their positions – long holdings in GLD are the lowest in four years
- Gross short futures on gold are close to a record high
- There is a distinct cooling at the US Fed for quantitative easing
- The structural role of gold when it comes to monetary policy is being questioned
- All the talk about "currency wars" did not, as expected, benefit gold
- The renewed appetite for riskier assets like stocks and bonds which unlike gold pay interest and dividends is causing rotation out of gold
- Gold's role as a safe haven against systemic risk is slowly fading away
- An improving US economy leading to a stronger dollar is hurting gold which tend to move in the opposite direction
- Anecdotal evidence from online gold stores suggest retail buyers of coins, bars and certificates have unprecedented fear of further price falls
- The 2,000 tonnes held by ETFs could flood the physical market when investors exit
- Number one consumer India is actively trying to throttle domestic gold demand
- Even robust physical demand from China and central banks will be overwhelmed by the much bigger financial transaction side of the market