By Luzi-Ann Javier
Janet Yellen sent gold prices on a roller-coaster ride. Now, hedge funds and the metal's best forecasters are predicting there's only one way prices are heading next: down.
The Federal Reserve Chair on Wednesday (16 December) raised US interest rates for the first time in almost a decade, sending bullion prices swinging and driving the metal's 30-day volatility to a six-week high. While traders couldn't decide on a direction for gold, Robin Bhar and Barnabas Gan, the most accurate forecasters, are convinced futures will keep falling in 2016. Money managers agree, raising their net-short position to the highest ever."Because gold is an emotional commodity, you're dealing with the way that crowds think," said Brian Barish, chief investment officer of Denver-based Cambiar Investors LLC, which oversees about US$14 billion. "When that's the case, it's very hard to predict human emotions other than they're going to change around from time to time. I wouldn't touch it personally. I think it has a lot lower to go."
After a decade-long bull market that propelled gold to a record in 2011, the precious metal is poised for a third annual loss. With the end of the US stimulus era and very little inflation, investors see no reason to stay in bullion and are dumping their holdings in exchange-traded products. Higher rates cut the metal's appeal as a store of value as the dollar strengthens.
Record Bears
Futures declined 1% last week to $1,065 an ounce on the Comex in New York. The 30-member Philadelphia Stock Exchange Gold & Silver Index of shares dropped 6.1%, trading near the lowest since 2000.
(Bloomberg)
Janet Yellen sent gold prices on a roller-coaster ride. Now, hedge funds and the metal's best forecasters are predicting there's only one way prices are heading next: down.
The Federal Reserve Chair on Wednesday (16 December) raised US interest rates for the first time in almost a decade, sending bullion prices swinging and driving the metal's 30-day volatility to a six-week high. While traders couldn't decide on a direction for gold, Robin Bhar and Barnabas Gan, the most accurate forecasters, are convinced futures will keep falling in 2016. Money managers agree, raising their net-short position to the highest ever."Because gold is an emotional commodity, you're dealing with the way that crowds think," said Brian Barish, chief investment officer of Denver-based Cambiar Investors LLC, which oversees about US$14 billion. "When that's the case, it's very hard to predict human emotions other than they're going to change around from time to time. I wouldn't touch it personally. I think it has a lot lower to go."
After a decade-long bull market that propelled gold to a record in 2011, the precious metal is poised for a third annual loss. With the end of the US stimulus era and very little inflation, investors see no reason to stay in bullion and are dumping their holdings in exchange-traded products. Higher rates cut the metal's appeal as a store of value as the dollar strengthens.
Record Bears
Futures declined 1% last week to $1,065 an ounce on the Comex in New York. The 30-member Philadelphia Stock Exchange Gold & Silver Index of shares dropped 6.1%, trading near the lowest since 2000.
(Bloomberg)
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