Gold’s “correction” was overdue and the metal may slide below $1,700 an ounce in the next few days before rebounding, said Daniel Briesemann, an analyst at Commerzbank AG.
Gold futures reached a record $1,917.90 an ounce in New York yesterday before erasing the gain and today slumped as much as 5.2 percent to $1,763.80 as increased orders for U.S. durable goods eroded demand for the metal as a haven asset.
Briesemann spoke today by phone from Frankfurt.
“I definitely think that a correction was overdue. Maybe the trigger for the correction was that the gold price yesterday wasn’t able to maintain the $1,900 mark. This may have triggered some technical selling and profit-taking.”
Gold may have been pressured by a report showing orders for U.S. durable goods climbed more than forecast in July and by advancing U.S. and European equities, he said.
While gold may fall below $1,700 an ounce in the next couple of days, “the correction should be rather short-lived,” Briesemann said.
“The recovery is still on a very shaky footing. We see more downside risks than upside potential for the global economy. That, in turn, should be quite positive for gold as a store of value or a safe haven. If the global economy gets even gloomier and if we get more disappointing data, then we will test the psychological $2,000 mark” before the end of the year, he said.