In post published month ago I mentioned the short term bear outlook for the gold. The drop to the $1550’s was somehow expected, however the developments from the last week, which led to current sell-off of the precious metal, raise some questions.
On 10th of April, 2013 in Bloomberg following article was published: “Goldman Cuts Gold Price Forecast Through 2014as Cycle Turns“. By that time the gold price was close to the support line of the two year consolidating parallel channel. Few days later nn 15th of April 15, 2013 on MarketWach the title “Gold sinks 6%; copper hit after China data” unfolded.
Is that coincidence? Only couple of days after the price outlook cut sharp correction follows. Recently many investors put ratings the many of the big investment firm’s under question after their misled recommendations triggered the last financial crisis. Probably they are correct to ignore the signals however in that case play against the “Goliath” was not good idea. Just keep in mind that one can create self fulfilling prophecy if enough people believe and act simultaneously. Probably that is what is happening now. I let the investor public decide by themselves what is the true reason for the continuing slide of the gold. One thing is true – the cycle is slowly turning… or maybe not so slowly. We are about to see.