2016 has proven to be a roller-coaster for stock markets, which is giving the traditional safe haven of gold a truly big boost. While on Tuesday 16 February 2016, Gold Prices were down by 2% and stood at $27.40 an ounce, somewhere close to $1211.20, on Wednesday, the prices steadied at $1200.
The entire week proved to be a real good time for investors of the gold market. Credit goes to the hike in European Stocks retreating risk aversion and driving prices to one-year high all through last week. Spot Gold then was at a price of $1201.69 an ounce, up by 0.1 percent but off an earlier high of $1212.20.
According to Goldman’s global head of commodities Jeffrey Currie, it’s now time to bet on the metal’s decline. Gold surged to a high level in stocks last week as the stocks sold off and investors diverted their attention to something safer instead. “Systemic risks from oil, China and negative rates are very unlikely,” a team at the bank, led by Jeffrey Currie and Max Layton, said late Monday.
However, the market closed on a note of hope to surge the prices back that had overblown in the last week. The financial markets have said to have overreacted and gold prices are on their way to retreat after really solid gains this year. Bullion has seen a rise of 13.5% this year. This ascent can be enough to guarantee stabilization of gold market even in a volatile economy.
Quoting Currie’s note, on Monday: “We believe that the sharp rise in gold prices this past week was mostly due to concerns over systemic risks, particularly in the banking sector, given the sharp correlation of gold prices with bank stocks and other measures of systemic credit risks. While this is a continuation of a trend established since the beginning of the year that started with systemic concerns over oil and China, we believe that these new fears like the past fears are not justified.” [http://www.businessinsider.com/goldman-says-short-gold-2016-2]
Inferring from the above excerpt, gold prices will be down by $1100 troy per ounce within a period of 3 months and by another $100 within a span of 12 months. From the standpoint of buyers, golden days are round the corner.