Gold price 'to recover quickly' after Monday's selloff: Commerzbank
(Kitco News) Gold is likely to recover quickly after Monday’s sudden selloff, according to Commerzbank. “Given that the general situation remains bullish for gold, we regard yesterday’s sell-off as a brief anomaly and expect prices to recover quickly,” writes Commerzbank commodity analyst Carsten Fritsch. On Monday, gold dropped 2% on the day, briefly dipping below $1,900 an ounce and silver fell 8% while temporarily trading below $24 an ounce. Commerzbank says that there was no specific trigger behind the selloff while citing higher U.S. dollar. “The stronger US dollar had already been weighing on precious metals prices since the morning. The selling pressure increased in the afternoon when U.S. stock markets opened sharply down. This pattern could point to forced selling by investors to generate liquidity,” Fritsch points out.
Technical selling also likely played a role as prices fell below key technical levels, the analyst says. The good news is that investors viewed the drop in prices as a buying opportunity. “The gold ETFs tracked by Bloomberg registered inflows of 36 tons yesterday, their biggest daily inflow to date this year – which has already been a record year for ETFs. Yesterday’s inflows correspond to four days’ worth of global mining production,” adds Fritsch.