Breaking a two-session win streak, gold fell almost $8 on Friday, December 28th, setting its fifth straight week of losses down into the books. The good news is that this is the smallest loss in the five-week losing streak at 0.3%.
This could be due to the fact that the holiday week shortened the trading session, but palladium still managed to pick up 2.6% in the same time period. The week was dampened with thin trading as other precious metals also shifted around and fell.
Platinum was the big loser of the holiday week, coming in at 1.0% down while silver followed not too far behind with a loss of 0.8%, tying it with gold for the five week losing streak.
Economic Conundrum Hits Home
Also this past Friday, February gold delivery dropped $7.80, a 0.5% loss to come to $1,655.90 per ounce on the Comex in New York. While the dollar remains strong, the looming fiscal cliff uncertainty and profit taking at the year’s end took its toll all around.
According to MarketWatch, the former director of the U.S. Mint and current chief strategist at Morgan Gold, Ed Moy had this to say: „What we’re seeing is lot of profit-taking by people who’ve made pretty good money on gold over the last couple of years…investors are really concerned about what their tax situation is going to look like for 2013… Just knowing all the talk about raising capital-gains and personal-income taxes — people are profit-taking.“
Mr. Moy is referring to the looming fiscal cliff and possibility that if lawmakers don’t reach a deal that will avert tax increases and spending cuts by January 1st, United States citizens could find themselves right in the middle of the government’s enigma.
Gold Loss Streak Longest in Two Years
This recent five week streak of losses in gold marks the longest run since January 2012. But even despite that figure, fifteen participants in a Bloomberg survey expected gold prices to rise next week compared to only one who thought they would drop. Three respondents were neutral on what gold will do. It seems that this is the most bullish outlook since late August of this year.
But Kitco’s weekly gold survey sees a parallel with last week, with 19 of 33 participants responding, twelve of which saw prices as going up next week, four seeing gold dropping and three seeing gold prices going sideways or remaining unchanged.
A few people pointed out that there’s a potential for a rebound from “oversold” conditions, commonly called a “dead-cat bounce.” And with Comex gold hitting a four-month low this past week, range trading in thin holiday conditions this week may have made a difference. This has people speculating that those buyers who are waiting in the wings might start to dip their toes back in the water come the start of the New Year.
Gold and Silver on the Year and Month
Gold is down 3.3% for the month, but remains 5.7% higher on the year. March silver lost 26.5 cents, or 0.9%, closing at $29.975 per ounce. Still, silver has gained 7.4% this year for a $2.06 gain.
So, what do you think is going to happen come New Year? Will investors in the wings start to enter the market? Or will gold continue to drop? What are your plans in either case? Let us know below!