Gold Will Fail to Glitter, says HSBC

Source:

"While the economic environment is gold-supportive, we believe that gold prices are more based on trends than fundamentals. . ."

Bulls expect rise to $1,200. HSBC Private Bank has reiterated its warning that investors could be caught out by putting too much faith in gold, amid economic uncertainty. The precious metal has dropped back from recent highs of $1,000 an ounce to $910 in current trading. Fredrik Herbrand, head of global strategy at the private bank, said: "All that glitters is not gold. While the economic environment is gold-supportive, we believe that gold prices are more based on trends than fundamentals and may not sustain such high levels in the long term."

According to traders, sales of gold exchange traded funds have ebbed away and hedge funds have been forced to close long positions to meet higher equity margin calls.

However, there are plenty of gold bulls out there, whose opinions balance the bears. According to Middle East research outfit Zawya: "It is not unrealistic to predict $1,200 an ounce in the next 12 months."

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