Gold has looked so bad recently that some technicians believe it can’t get much worse, which makes it a good time to try buying.
Gold shed 12% last month, capping a second-quarter tumble of 23%, its worst quarterly performance in available history. In the process, the price of the SPDR Gold Trust GLD +1.70% exchange traded fund fell on Friday to the lowest level seen in three years.
“It’s looking like a tremendous washout,” said Mark Arbeter, chief technical strategist at S&P Capital IQ. “Sentiment has been extremely bearish,” and weekly momentum indicators have gotten oversold, “which is a good sign for [prices].”
Weighing heavily on gold were expectations that the Federal Reserve might start winding down its easing efforts, which to some investors would reduce gold’s appeal as hedge against inflation. Also hurting gold has been a rise in the value of the U.S. dollar.
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