Gold, which tumbled into a bear market last week, is in need of a correction, according to investor Jim Rogers, who said that he’s not buying the commodity yet as it hasn’t dropped enough.
“This may be the correction that gold needs,” said Rogers, chairman of Rogers Holdings, while reiterating a forecast that bullion will go higher over the next decade. “If it goes down enough, I will start buying it,” Rogers told reporters in Singapore today, without identifying a level.
Gold extended losses to the lowest price in more than two years today after investors cut holdings in exchange-traded products as the U.S. recovers. Rogers, who foresaw the start of a commodity rally in 1999, has previously backed bullion to rally as central banks including the U.S. Federal Reserve boosted their balance sheets to stimulate economic growth. Gold has lost 16 percent in 2013 after rallying for 12 years.
“The cross through $1,500 was a very significant one, I think this thing’s going down,” Mark Matthews, head of research at Bank Julius Baer & Co., said on Bloomberg Television’s “First Up” with Susan Li. “Europe’s crisis is abating, the U.S. economy’s recovering, the Fed’s hinting it’s scaling back its asset purchases at some point and in the emerging markets inflation will remain very benign.”
Bullion for immediate delivery lost as much as 5.3 percent to $1,404.05 an ounce, the lowest level since March 2011, and was at $1,406.51 at 5:38 p.m. in Singapore. Prices tumbled 5 percent on April 12, taking losses to more than 20 percent since the record close in September 2011 and meeting the common definition of a bear market.
Rogers said in April 2006, when gold was trading at about $613 an ounce, that a boom in energy and raw-material prices would help drive bullion to a then-record $1,000, without giving a timeframe. In July 2007, Rogers said that he wasn’t selling his gold position even though there were too many speculators backing further gains.
In October 2009, Rogers said that gold may top $2,000 in the next decade, citing the printing of money. In August 2011, Rogers said while he wouldn’t buy more gold “right now,” the metal was still poised to rally to $2,000 “over the years.”
Goldman Sachs Group Inc. forecast that bullion may tumble to $1,390 an ounce over 12 months, according to a report on April 10. While higher inflation may be the catalyst for the next cycle, that’s probably several years away, Goldman said.
Holdings in gold-backed exchange-traded products shrank 6.9 percent in the first quarter, the biggest reduction since at least 2004, according to data compiled by Bloomberg. They stood at 2,406.16 metric tons on April 12, the least since August.