Janet Yellen sent gold prices on a roller-coaster ride. Now, hedge funds and the metal’s best forecasters are predicting there’s only one way prices are heading next: down.
The Federal Reserve Chair on Wednesday raised U.S. interest rates for the first time in almost a decade, sending bullion prices swinging and driving the metal’s 30-day volatility to a six-week high.
While traders couldn’t decide on a direction for gold, Robin Bhar and Barnabas Gan, the most accurate forecasters, are convinced futures will keep falling in 2016. Money managers agree, raising their net-short position to the highest ever.
“Because gold is an emotional commodity, you’re dealing with the way that crowds think,” said Brian Barish, the chief investment officer of Denver-based Cambiar Investors LLC, which oversees about $14 billion.
“When that’s the case, it’s very hard to predict human emotions other than they’re going to change around from time to time. I wouldn’t touch it personally. I think it has a lot lower to go.”
After a decade-long bull market that propelled gold to a record in 2011, the precious metal is poised for a third annual loss.
With the end of the U.S. stimulus era and very little inflation, investors see no reason to stay in bullion and are dumping their holdings in exchange-traded products.
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