Post date: Jul 12, 2013 12:46:16 PM
Gold has its best week in almost two years thanks to Ben Bernanke's 'taper' remarks. But that's about as good as it gets - look for more selling, says Credit Suisse's Tom Kendall
LONDON, ENGLAND, UK (JULY 12, 2013) (REUTERS) - VICE PRESIDENT OF PRECIOUS METALS AT CREDIT SUISSE, TOM KENDALL,
"(QUESTION: gold's best week for almost two years this week, 4.5%. Can we say the worst is over?) I'm sure there are many who would love to say the worst is over. I suspect probably not, however. 4%-ish in a week is pretty good performance, but as you said, gold is reflecting what's been happening in other markets as well - big moves in Treasury yields, emerging market equities. In the context of what's happened over the last two years though, I really don't think anyone can step in and say, yes, this is definitively the bottom here. It's a reflection of the fact that a lot of the markets were a bit oversold before Bernanke soothed the waters. But April was a chastening experience for a lot of people who bought that dip down to $1,300-ish and thought they'd seen the bottom and then promptly saw the market collapse another $100, $150 on them.
(QUESTION: So is the next level on the downside- are we looking at $1,200 and I suppose if you do get through that, the big one, $1,000 isn't too far away?)
Well the technical guys would point to an area around about $1,150, $1,160 as being a key point for the market on the charts. Round numbers sometimes mean a lot and sometimes don't mean so much. I think the next key point on the downside is the previous low in this cycle, about $1,180.
(QUESTION: That's a lot of talk about the downside and the bearish side of gold. But what levels on the upside should we be looking at if we break through them that will give gold something of a breather?)
Well physical demand is very strong right now and if you get a pause in investor sales, then we could see gold being taken back up to the sort of 13, 20, 22 kind of area on that physical buying, I think. But that's going to be pretty stiff resistance at that point."