Categories: General Market Commentary / Precious Metals
Topics: General Market Commentary / General Precious Metals

Gold's Sharp Drop Is "Strategic Buying Opportunity" - Goldman Sees Physical Demand Intact From China

Oct. 9, 2016

Gold's Sharp Drop Is "Strategic Buying Opportunity" - Goldman Sees Physical Demand Intact From China

 

The drivers of strong physical ETF and bar demand for gold during 2016 are likely to remain intact, according to Goldman, including continued strong physical demand for gold as a strategic hedge, limiting any downside, seeing the recent sharp gold selloff as a strategic buying opportunity, given substantial downside risks to global growth remain, and given that the market is likely to remain concerned about the ability of monetary policy to respond to any potential shocks to growth.

As Goldman details, Gold has dropped sharply over the past month, from c.$1,350/oz to c.$1,250/oz, with the majority of the move lower occurring on Tuesday of this week, following hawkish comments by Fed officials (Lacker in particular) and a subsequent break of the psychologically and technically important $1,300/oz level (N.B. the next important technical level is $1,248/oz – a 1.618 extension target from the Aug. 2 high).

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