Gold could fall to the bottom this week

Over the past two weeks, spot gold prices have fallen about 15 percent and according to some analysts prices could fall further over the next few days before moving up again.

“Precious metal prices are expected to exhibit a V-shaped pattern this week, where weakness in gold takes the market down to support near $1,580/oz before rebounding late in the week,” Tom Pawlicki, Precious Metals and Energy Analyst at MF Global, said in a report Monday.

He added gold prices could rebound later in the week on bargain hunting and if the ECB takes further steps to aid Greece. Slovenia, Finland and Germany are expected to vote this week on whether or not to scale up the European Financial Stability Facility.

“We favor buying a dip in gold at $1,580 and (are) targeting a recovery toward $1,700,” he said.

Gold [XAU=  1595.70   -61.33  (-3.7%)   ] pulled back 8.6 percent last week, driven by a hike in trading margins, a stronger U.S. dollar and selling by hedge funds. On Friday the CME raised margins for gold by 21 percent after a volatile trading week.

“What we have started to see is a mass liquidation of hedge funds, the paper trade is going to be short and I think it’s going to form a beautiful bottom over the next couple of days,” Jurg Kiener, Chief Investment Officer at Swiss Asia Capital, told CNBC.

Kiener recommends buying physical gold or gold-mining stocks over ETFs

“The physical market in general is still very, very firm but the paper market overall is still all over the place,” he said.

“I think profit margins for (gold miners) are still great as long as gold doesn’t fall below $1,100, so there is ample of room for cash flow to look fantastic,” he added. – Reuters

Tags: Gold analysis, Gold future prices, Gold futures, Gold investment, Gold news, Gold price, Gold price forecast, gold prices, Silver price, silver prices