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· Gold Prices Tumble; Traders Liquidate their Gold Holdings

The yellow metal is falling, as earlier anticipated buttressing the bearish trend now in play, taking into consideration that global investors are liquidating their safe haven assets and pouring such funds into riskier assets at record levels as global equities tick higher this morning at Asia and Europe.

Gold bulls present resolve seem damaged right now amid the precious metal prices recording its worst month in four years, as three promising COVID-19 vaccines have triggered global investors’ excitement and hopes that the worse is definitely over.

At the time of drafting this report, Gold futures prices were down more than 0.7%, and traded below the $1,775/ounce support level, as it approaches the $1,750/ounce price area, hitting such level ($1,750/ounce) could trigger more selling pressure by gold bears riding as fast as the speed of light, taking into account gold prices as lost more than 5.1% November alone.

Sequel to the prevailing bearish trend taking it hold on the month of November, gold bugs had the price band wagon on for nearly a year as investors rushed in record levels investing in the precious metal due to the high geopolitical uncertainty and of course the worst pandemic known to humanity, but all changed few weeks ago, as risk-on investing bounced back in a big way. The yellow metal dropped through the $1,800/ounce mark on Friday and continued falling today.

It becomes fair to say gold bears are taking the grip, and hold the ace when considering the macro coming from COVID-19 vaccine drug makers, means the yellow metal could plunge aggressively amid a combination of liquidation from institutional funds like hedge funds ,gold backed ETFs and a lack of physical demand for the precious metal points to the recent price action ,hinting gold prices could drop below the $1750/ounce price level by the end of the week, except the U.S Fed Reserve chairman in his scheduled meeting with Congress this week, re-emphasize longer periods of low interest rates in supporting the world’s biggest economy, gold bulls call remains cut-off.

Indeed, the prevailing price action reveals if the $1750/ounce psychological and technical price area does not hold, the risk of a deeper correction could swell up more.

· Gold: Next critical support awaits at $1700 – Citibank

The Citibank Analysts have downgraded their gold-price forecasts for 2021 alongside their estimate for flows in gold ETFs, in the face of economic improvement in the developed economies.

Key quotes

- “Net investment into gold ETFs to hit 800 tons in 2020, 75 tons less than previously forecast and 50% lower again in 2021.”

- “Sees support for gold in short term at $1,700.”

- “See price rallies for industrial commodities (eg. copper) suggest rotation from risk-averse to risk-on assets.”

- “See a move above $2,000 likely in next 3-6 months but barring a fiat crisis, prices may then trend lower.”

· KITCO SURVEY | Vaccine hopes will continue to weigh on gold price

Renewed investor optimism on hopes that a vaccine will revive the global economy faster than expected is weighing on gold. According to the latest results from the Kitco News Weekly Gold Survey, Sentiment points to further weakness in the near-term.

The survey shows a majority of Wall Street analysts are bearish on gold next week and optimism among retail investors remains below 50% after falling to a multi-year low the previous week.

The bearish sentiment comes as the gold market has dropped below critical support levels. At the start of the week, gold prices fell to a four-month low after pushing below $1,850 an ounce. Heading into the weekend, the gold market has continued to fall, dropping below critical support at $1,800. Analysts say that the next major support point to watch is $1,750.

“The reopening trade will continue to put pressure on gold as people exit the safe haven,” said Gareth Soloway, chief market strategist at InTheMoneyStocks.com said. “Once gold hits approximately $1,750, gold will find a bottom and start trekking up again.”

For many analysts, the biggest hurdle gold faces is ongoing news about potential vaccines.

“The prospects for a vaccine and firmer interest rates has spurred the powerful selloff, coming from stale longs and gold ETFs,” said Marc Chandler, chief market strategist with Bannockburn Global Forex. “Momentum traders have jumped aboard and are playing from short side.”

Along with growing general investor optimism due to vaccine news, some analysts have said they are negative on gold because of seasonal factors. Historically, the gold market is soft, heading into December and buying momentum picks up closer to January.

Although sentiment is overall bearish, some analysts see the current selloff as a buying opportunity.

Ole Hansen, head of commodity strategy at Saxo Bank, said that he remains bullish on gold in the near-term. He added that Friday’s selloff is on very thin volume as many traders continue to celebrate U.S. Thanksgiving.

Hansen added that there are no fundamentals reasons for gold’s current selloff as the U.S. dollar and bond yields have dropped, two strong support for the gold market.

“We have seen quite a significant change in investor sentiment based on hope not reality, just hope,” he said.

Hansen said that he sees weaker prices as a buying opportunity.

“This is the blowout we needed because gold has really been doing nothing since it dropped below $1,900,” he said. “We are seeing the market being tipped over the edge. If you liked gold at $1,850, then you have to like gold at $1,750. The fundamental reasons to hold gold haven’t gone away.

Adrian Day, chief investment officer at Adrian Day Asset Management, said that he expects to see lower prices next week as the market has room to move lower after pushing below the 200-day moving average.

However, he also said that gold’s long-term fundamentals remain in place.

“[Janet] Yellen at Treasury and [Jerome] Powell at the Fed will combine to support massive unfunded spending on everything from aid for bankrupt states to student debt forgiveness. That spending will be very bullish for gold,” he said.

Reference: Kitco, FXStreet, FXEmpire