Goldman’s Currie Sees Gold Dropping Below $1,000 on Dollar (2)
2015-07-22 06:04:40.825 GMT
(Updates price in sixth paragraph.)
By Debarati Roy
(Bloomberg) -- Goldman Sachs Group Inc.’s Jeffrey Currie
says the worst is yet to come for gold and that prices could
fall below $1,000 an ounce for the first time since 2009.
“With the more positive outlook on the dollar, and with
debasement risk starting to fade, the demand to use gold as a
diversifying asset against the U.S. dollar becomes less and less
important,” said Currie, who told investors to sell in 2013
before the metal’s biggest collapse in three decades.
Prices this week slumped to the lowest since 2010. The rout
is deepening amid mounting speculation that U.S. interest rates
will climb this year, curbing the appeal of bullion because it
doesn’t pay interest like competing assets. At the same time,
China bought less of the metal than analysts were expecting, and
the dollar keeps getting stronger.
Currie isn’t alone in predicting more declines. ABN Amro
Bank NV’s Georgette Boele and Robin Bhar of Societe Generale AG
say bullion will approach $1,000 by December. Money managers are
holding the smallest net-bullish bet on gold since the U.S.
government data begins in 2006. The metal has led a retreat
among raw materials, as the Bloomberg Commodity Index this week
fell to a 13-year low.
“The risks are clearly skewed to the downside in this
environment,” Currie, Goldman’s New York-based head of
commodities research, said in a telephone interview on Tuesday.
“There is a probability that the market trades below $1,000
this year given our broader commodity view.”
Bullion Drops
Gold for immediate delivery fell 0.8 percent to $1,092.10
an ounce at 2:03 p.m. in Singapore, Bloomberg generic pricing
showed. The metal retreated to $1,086.18 on Monday, the lowest
level since March 2010.
More than $4.4 billion has been erased from the value of
exchange-traded products backed by gold since June 30. Holdings
are the smallest since 2009, data compiled by Bloomberg show.
“In longer term, we definitely like playing this market on
the short side,” Currie said. “We think we are in a structural
bear market, not only in gold, but across the commodity complex,
as the individual commodity stories are reinforcing to one
another, creating a negative feedback loop.”
For Related News and Information:
Gold Leads Commodities ‘Mess’ That Has Many Investors Smarting
Why Buy Gold Baffles Investors as Top Forecaster Sees More Pain
Gold Speculators Least Bullish on Record as Rate Rise Approaches
Top Commodity Stories:CTOP<GO>
Top Metals & Mining: METT <GO>
To contact the reporter on this story:
Debarati Roy in New York at +1-212-617-5307 or
droy5@bloomberg.net
To contact the editors responsible for this story:
Millie Munshi at +1-212-617-5543 or
mmunshi@bloomberg.net
Susan Warren
2015-07-22 06:04:40.825 GMT
(Updates price in sixth paragraph.)
By Debarati Roy
(Bloomberg) -- Goldman Sachs Group Inc.’s Jeffrey Currie
says the worst is yet to come for gold and that prices could
fall below $1,000 an ounce for the first time since 2009.
“With the more positive outlook on the dollar, and with
debasement risk starting to fade, the demand to use gold as a
diversifying asset against the U.S. dollar becomes less and less
important,” said Currie, who told investors to sell in 2013
before the metal’s biggest collapse in three decades.
Prices this week slumped to the lowest since 2010. The rout
is deepening amid mounting speculation that U.S. interest rates
will climb this year, curbing the appeal of bullion because it
doesn’t pay interest like competing assets. At the same time,
China bought less of the metal than analysts were expecting, and
the dollar keeps getting stronger.
Currie isn’t alone in predicting more declines. ABN Amro
Bank NV’s Georgette Boele and Robin Bhar of Societe Generale AG
say bullion will approach $1,000 by December. Money managers are
holding the smallest net-bullish bet on gold since the U.S.
government data begins in 2006. The metal has led a retreat
among raw materials, as the Bloomberg Commodity Index this week
fell to a 13-year low.
“The risks are clearly skewed to the downside in this
environment,” Currie, Goldman’s New York-based head of
commodities research, said in a telephone interview on Tuesday.
“There is a probability that the market trades below $1,000
this year given our broader commodity view.”
Bullion Drops
Gold for immediate delivery fell 0.8 percent to $1,092.10
an ounce at 2:03 p.m. in Singapore, Bloomberg generic pricing
showed. The metal retreated to $1,086.18 on Monday, the lowest
level since March 2010.
More than $4.4 billion has been erased from the value of
exchange-traded products backed by gold since June 30. Holdings
are the smallest since 2009, data compiled by Bloomberg show.
“In longer term, we definitely like playing this market on
the short side,” Currie said. “We think we are in a structural
bear market, not only in gold, but across the commodity complex,
as the individual commodity stories are reinforcing to one
another, creating a negative feedback loop.”
For Related News and Information:
Gold Leads Commodities ‘Mess’ That Has Many Investors Smarting
Why Buy Gold Baffles Investors as Top Forecaster Sees More Pain
Gold Speculators Least Bullish on Record as Rate Rise Approaches
Top Commodity Stories:CTOP<GO>
Top Metals & Mining: METT <GO>
To contact the reporter on this story:
Debarati Roy in New York at +1-212-617-5307 or
droy5@bloomberg.net
To contact the editors responsible for this story:
Millie Munshi at +1-212-617-5543 or
mmunshi@bloomberg.net
Susan Warren