Tags: gold | bull | stock | ETF

Analysts: Gold Rally Is Over

By Michael Kling   |   Tuesday, 07 May 2013 07:59 AM

While gold may have rebounded somewhat from last month's plunge, its bull market is over, analysts say.

As recently as last October, gold was near $1,800 an ounce. Then gold prices dropped in a huge selloff in April, falling 25 percent from peak prices.

"I think the trend has changed," James Cordier, president of Liberty Trading Group, told CNNMoney. "The days of $1,800 gold are over."

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Gold investors have been dumping gold and jumping in rising stock markets. Gold continued to fall in April even though economic news like more central bank monetary easing should have supported prices.

So far this year, the Standard & Poor's 500 is up 13 percent. Gold is down 13 percent, according to CNNMoney.

Gold is viewed as a hedge against inflation and a safe haven during times of turbulence. Yet inflation is still low despite central banks' easy monetary policies.

Plus, geopolitical fears that boosted gold values have subsided, said Carlos Sanchez, precious metals analyst at commodities firm CPM Group, CNNMoney reported. Europe has improved and the United States has made some headway in reducing its debt.

Gold investors have been fleeing gold exchange-traded funds (ETFs), taking out $6.77billion from SPDR Gold Shares, the largest gold-backed ETF, according to IndexUniverse data cited by CNNMoney. Shares of iShares Gold Trust dropped 7 percent in the last month, and ProShares Ultra Gold shares fell 14 percent.

Although gold ETFs are down, physical gold remains popular, says Chris Blasi, president of Neptune Global Holdings, CNNMoney reported. Central banks and long-term investors still like gold to hedge against the U.S. dollar.

"From the traders' perspective, it's going to be difficult to make money in gold for the next few quarters," Blasi said to CNNMoney. "But the bull market isn't over."

"We feel the bull market is very much intact even if there’s a lot of uncertainty at the moment for investors," Marcus Grubb, managing director of investment at the World Gold Council, told Yahoo. "There’s some switching into equities in the United States going on — this has affected gold to some degree — but we don't believe you’re seeing this great rotation as it's called."

Grubb said gold dropped because of a large short sale in the futures market in New York and its price will rebound, according to Yahoo.

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