Home Insights Opinion Gold Prices May Continue To Soften Gold in real danger of more long liquidation before end of year, says Emirates NBD. by Gerhard Schubert, head of precious metals, Emirates NBD December 4, 2012 Gold was down $36 from last week to $1715. Gold gave up all the gains from last week and fell back into the range of $1700 to $1738. There have been various attempts to explain what happened last Wednesday, the moment Comex opened, and I do want to give you my take on that event. I think this was an extremely well executed ploy in a market what looked already heavy for two days. The key was to sell the December contracts quickly and in an absolutely non-price sensitive fashion. The drop that followed might have even been bigger than anticipated, but it gave the seller all the time in the world to buy the February contracts at extremely attractive prices, compared with the switch rate. References to large put-option buying during the previous days have also been referred to and we might not find out what really happened, but it appears that this has been considered a buying opportunity. Gold prices recovered nicely after this event and prices reached $1730 before being sold off again on last Friday afternoon. One of the reasons given was the slow progress in the talks about the “Fiscal Cliff”, but that appears to be more of an excuse than an explanation. There seems to be a real danger that gold could see some more long liquidation before the end of the year, as liquidity and adding risks make way towards booking profits and closing the books for the year. The immediate drivers for the gold price appear to be the progress of the talks in the US about the “Fiscal Cliff” and the developments in the European Sovereign debt crisis. It appears now that the markets have the certainty that the uncertainties will continue, until at least September 2013, the time of the German general election. Greece will most likely receive the required payments as a sort of drip-feed patient, unless real implementations of the Greek government’s decisions take place and effect. Physical buying has been evident on Thursday and Friday and this has to be considered helpful, but the overall amount of physical buying seen, has to be described as disappointing. The premium from Gold over Platinum fell last week to $115. The latest Commitment of Traders Report (COTR) shows an increase in long positions, accompanied by an increase in fresh short positions. 0 Comments