Gold down again, but is now the right time to buy?
New York (May 29) Gold fell again on Friday as US economic data suggested a rise in interest rates may occur soon. Out of New York, June futures settled down 0.5% at US$1214 an ounce.
In the Fed’s meeting minutes, released last week, it was suggested that a rate rise was likely should the US economy continue to show signs of improvement.
US jobless data out yesterday confirmed that the economy was indeed doing better, with the number of unemployed lower than expected, indicating healthier labour markets.
Investors were seemingly put off by the announcement as gold touched US$1,212 per ounce in after-hours US trading.
Many analysts and traders have predicted that gold was due a correction after its rampant start to the year.
Joni Teves, an analyst at UBS, said the actions of those who had intended to buy when the dip came would now be tested.
“Many market participants over the past few months have expressed interest to buy a dip in gold,” said Teves.
“This is now the time to see whether those intentions would be or are being translated into action.”
Teves added that hesitation to buy into a declining market was understandable.
“We maintain the view that short-term weakness in gold should be viewed as an opportunity to build strategic positions.”