Precious Metals

Gold Investing

Market watchers like Ross Norman and Rick Rule have taken to the camera to weigh in on the recent gold price rout.

The spot gold price sunk below $1,100 per ounce during Tuesday trading, and was sitting at $1,098.58 as of 3:00 p.m. EST. Meanwhile, US gold futures for August delivery were at $1,103.50. 
According to Reuters, the $1,100 mark is a “critical” support level for the yellow metal, and some analysts believe that if it fails to climb back above it, a “further selloff” could be the result.
That would certainly be bad news for gold, which on Monday dropped over 3 percent, incurring its worst single-day loss since September 2013. The news outlet states that the fall came as sellers “dumped an estimated 33 tonnes of gold in just two minutes on exchanges in Shanghai and New York.”
Speculation is rife that the selling began in China. Reuters states that some market participants believe that it was “possibly a maneuver meant to push prices through critical support levels during a time of day when trading is light.”
All in all, the gold price is down 2.5 percent this week and 5.8 percent in July, a Wall Street Journal article states.

Market watchers react

Unsurprisingly, market watchers have been quick to comment on the gold price crash. Here’s a brief look at what a few well-known industry participants have said in the last couple of days.
Rick Rule, founder of Sprott Global Resource Investments, spoke recently on CNBC, stating that he believes “gold is locked in a war with the US dollar, and gold has been losing.” He added that he doesn’t “think that gold necessarily has bottomed,” but said that “the thing that would really kick gold higher would be if the US interest rate rise impacted housing starts, impacted the equities markets and impacted the debt markets and the US interest rise failed or [Federal Reserve Chair Janet] Yellen wasn’t able to follow through with a second US interest rate rise.”
Of course, the real question is when exactly a gold price rise may materialize. Though initially hesitant to make a prediction, Rule conceded, “I think you look for Q4 2015 for a real run in the gold price. I think we’re going to have a trading rally in gold and gold stocks now.” Watch Rule’s full CNBC interview below:

Ross Norman, CEO of London-based bullion dealer Sharps Pixley, also took to the camera to talk about the gold price rout. And like Rule, he’s at least a little optimistic about the metal’s prospects.
He told Bloomberg, “the dollar reigns supreme, the interest rate rise is making [gold] less attractive against other interest-earning assets.” However, “all of that is in the price. Investors are buying gold at pretty well below the cost of production, so your entry point if you like is very low.”
That said, he doesn’t think the hard times are yet over for gold. “Gold is under the ropes, sentiment is weak. I suspect we’ll have another bear raid before long,” he said. That could mean a dip below $1,000. Watch the full video with Norman below:

Meanwhile, GoldSeek.com and SilverSeek.com President Peter Spina took to Twitter to comment:


Finally, Canadian billionaire Eric Sprott said in a text interview published Monday, “[s]o far, everyone in the press is downplaying gold but I haven’t lost any conviction whatsoever.” He believes “untenable” financial situations in countries around the world will ultimately make gold a “good” currency to own.

Future gold price outlook

With the gold price hovering at the $1,100 mark, it’s tough to say where the metal will go next. Indeed, as the above comments from industry experts show, even those considered in the know are not necessarily sure whether gold has further to fall, and, if so, how long it will do so.
Investors will thus have to judge for themselves whether now is the time to take advantage of the drop in the gold price — and gold stocks — or not. It will certainly be interesting to see where the gold price goes for rest of the week, and indeed for the rest of the year.
 
Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article. 
Related reading: 
Weekly Round-Up: Gold Price Hits Five-year Low

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