Gold and silver price correction 'right on cue'

New York (Sept 6)  The downside correction in both gold and silver comes right on time, says INTL FCStone independent consultant Edward Meir. “The correction was arguably right on cue, as we also started to see increasingly giddy upside targets associated with each of the two metals, a telling sign of a top,” Meir writes. The higher the gold prices climb, the more dangerous the world becomes, the consultant adds. For example, with gold at $10,000, "we likely will have a total crash in the global financial system and so walking around with gold bars will not exactly do anyone much good,” he notes.

Investors’ willingness to take on more risky assets is putting pressure on the precious metals sector, according to TD Securities. “Gold and friends have begun to consolidate as the positive trade narrative and a modest rebound in US PMI data saw fear subside in the market as money managers preferred to take on risk,” the bank’s strategists write. On top of that, in just under two weeks, the Federal Reserve may end up disappointing financial markets, which will weigh on the precious metals even more. “We continue to suspect that the Fed may disappoint market expectations — after all, the S&P sits only a few percentage points off its highs, financial conditions have not tightened materially and several external event risks have come to a simmer. With long positioning extremely stretched, gold, silver and platinum could continue to trade lower in the near-term,” the strategists add.

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