Where Will Declining Gold Head? Investment Banks Suggest Further Gains

WikiFX News (15 Aug)- Gold prices recorded the biggest loss for seven years this Tuesday, returning markets into anxiety about precious metals. Nevertheless, they are expected to rise again according to Commerzbank.

On Tuesday, spot gold breached below $1,910/oz, down 6% on the day.

According to Carsten Fritsch, the analyst of Commerzbank, gold prices saw extensive gains in the last few weeks - first penetrating $1,920, then soaring above $2,000, and even approaching $2,100 last week. “The scale of the upswing over the past four weeks has been excessive. Sentiment towards gold became positive in the extreme, with only a minority of participants sounding a note of caution,” said Fritsch.

In addition, this rally was largely driven by investors appetite, which might be enough to put premium on gold prices but not enough to sustain the uptrend. “The price rise was almost solely attributable to robust investor demand, with all other demand components playing hardly any role. It is understandable that investors now appear to be taking profits.”

However, the analyst indicated that a very significant correction like in mid-March is very unlikely. Most importantly, Fritsch noted, this is not the end of the road for gold and silver prices, and the rally will resume after prices consolidate lower.

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