Gold, down 7.1 percent from the 2012 high in October, may extend its losses through next quarter, according to technical analysis by Stifel Nicolaus & Co.
The price may drop to $1,535 an ounce if it closes below the 200-day moving average, said Dave Lutz, the head of exchange-traded fund trading and strategy at Stifel Nicolaus in Baltimore. Futures for February delivery were little changed at $1,670.10 at 12:51 p.m. on the Comex in New York, after falling as much as 0.3 percent to $1,665.10. The 200-day moving average is about $1,669.
Gold is facing “headwinds” amid low inflation and the prospect for a budget agreement in Congress, Lutz said. If lawmakers are able to avoid the more than $600 billion in tax increases and spending cuts set to begin in January, it would remove an obstacle to economic growth and reduce demand for precious metals as a haven, he said.
“Low inflation and low-to-medium growth are going to be a negatives for gold,” Lutz said in a telephone interview. “Businesses are holding back on spending, but as soon as we get the budget stuff out of the way, 2013 could certainly be a good year for growth” in the economy, he said.
The “first stop” for gold will be $1,600, followed by a drop to $1,535 by the end of the first quarter, Lutz said, basing his forecast on the price move when futures fell below the moving average in March.