The recent drop in gold prices has investors calling a buying opp says UBS

The recent drop in the price of gold futures has started to see investors calling a new buying opportunity for the precious metal as bargain hunters jumped into the market, helping prices recover from a 12 percent selloff.

“Gold is a Buying Opportunity”

Gold prices recovered after a brutal 12 percent, 4 day selloff, which had some experts looking as low as the $1,480 an ounce level for support. Gold futures peaked recently at $1923.70 an ounce.

“First of all we had technical signal which suggested the prices would go lower, then we have the margin increase at the CME which obviously also added to the downside. Then we saw a lot of people actually looking for liquidity. If you look at your portfolio year to date, then the only thing that shines is gold. Then we have seen some liquidation in this search of liquidity and that brought us to sharp sell off.”

“If you look at physical demand, it is kicking in and this gives a good indication that probably prices should start to stabilise around the 200 day moving averages. So yes, gold is a buying opportunity right now.” said Dominic Schnider, Head-Commodity Research, UBS Wealth Management in a recent interview.

Meanwhile, Barclays Capital says that the larger backdrop for gold remains unchanged and is “still gold-fertile.” The firm says that the eurozone is still behind the curve in tackling its ballooning debt issues. “Macro insecurity amid low interest rates continues to be supportive for gold beyond the near-term weakness.”

“Gold is behaving like a classic commodity and is moving in tandem with the equity market. The selloff was overdone.” according to Adam Klopfenstein, a senior market strategist at MF Global Holdings, Chicago.

Latest Gold Futures Price

Gold for December delivery added $51.70 to settle at $1,652.50 an ounce on the NYMEX. The gold price has traded as high as $1,679.20 and as low as $1,616.80 an ounce, while the spot gold price was adding $19.

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