CHARTS: Warning for bears as gold price drops through $1,200 – by Frik Els ( – August 13, 2018)

Gold fell to fresh 18-month lows on Monday as the attractiveness of the hard asset continues to wane on the back of rising interest rates in the US and a strengthening dollar.

December futures trading in New York declined 1.5% to $1,201 a troy ounce, the lowest since February last year and now down more than 12% from its 2018 high reached in January. Spot prices dropped through the psychologically important $1,200 level with a dip to $1,193.15 an ounce.

Gold usually moves in the opposite direction to the greenback and has a strong negative correlation to interest rates as the metal produces no income and investors have to rely on price appreciation for returns.

At the same time US stock markets are humming and gold is trading near its lowest relative to S&P 500 Index futures since the start of the global financial crisis in 2007/2008 according to Bloomberg calculations.

Hedge funds and large-scale speculators active on the gold derivatives market are betting on further declines. According to the CFTC’s weekly Commitment of Traders data up to August 7 released on Friday speculators pushed the net short position (bets that gold will be cheaper in future) to a record of 63,282 lots or 197 tonnes.

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