Gold Prices Turn Negative With More Losses to Come

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Gold prices squashed the gold bugs Friday.

Comex gold turned negative for the year on Friday in wake of the surprisingly strong September jobs report. At some point, you figure more gold traders and investors will capitulate and sell, further depressing gold prices. Nothing is going their way in 2014.

Penny on Gold pricesIndeed, if you’re still long and strong on gold prices, it looks it will take an apocalypse to make physical gold or the Gold SPDR ETF (GLD) into a winner this year. It’s not like gold hasn’t had its chances, but there’s nothing to push it to sustainable gains.

Consider that a series of geopolitical crises failed to ignite gold prices. Russia and Ukraine, the Middle East, Iraq and Syria, an ebola outbreak in Africa — none of these incidents is showing up in prices. Fear is the best friend of gold prices, but the market has remained calm in the face of calamity.

Financial crises are even better for gold prices, but we’ve been all quiet on that front, too. Not even Europe’s most decrepit banks are roiling credit or equity markets anymore.

As for monetary policy? Gold bugs can forget about that, too.

Gold Prices Get No Help From Fed

In the U.S., the Federal Reserve is closer to the end of quantitative easing than it is to the beginning, and the much-feared wave of rampant inflation never came close to materializing. Heck, the idea that stimulus leads to inflation has been so thoroughly debunked that not even massive programs on the part of Japan and the European Central Bank can spook gold prices higher.

If anything, those overseas stimulus efforts are actually hurting the price of gold. Tightening at home and loose policy abroad has dollar going bonkers this year against the yen and the euro. Gold, of course, is priced in dollars, so when the greenback goes up, the shiny yellow metals comes down.

As so here is where the gold bugs find themselves. Both Comex gold prices and the GLD ETF are now negative for 2014. See the chart, courtesy of MarketWatch:

gold prices

This is the kind of selling that begets more selling. Demand for physical gold may be growing, but as an asset class, the fundamentals have abandoned the yellow metal. The stock market is quiet and complacent. Volatility is a no-show. There is no fear and panic — nor inflation — to get gold prices moving again.

The technicals are a mess, too, and they also suggest gold prices have farther to fall. Both Comex gold and SPDR GLD ETF are far below their 50-day and 200-day moving averages. Even worse, gold prices and the GLD ETF carved out death crosses late last month. When the 50-day moving average falls below the 200-day moving average, lots of traders take that as a sell signal.

This is not a chance to buy on the dip. Gold is toast in 2014. Get out before it gets worse.

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As of this writing, Dan Burrows did not hold a position in any of the aforementioned securities.


Article printed from InvestorPlace Media, https://investorplace.com/2014/10/gld-etf-gold-prices/.

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