September 15, 2011, 10:12 AM ET
By Murray Coleman
Gold and silver are opening Thursday sharply lower, heading for a fourth down session in the past five.The European Central Bank said Thursday it was coordinating with the U.S. Federal Reserve and other central banks to ease funding stress in the European banking system. The move came after German Chancellor Angela Merkel and French President Nicolas Sarkozy made supportive overtures to Greece while pushing the country to shore up its struggling debt markets.
The SPDR Gold Trust (GLD) is down 1.9% while the iShares Silver Trust (SLV) is falling 1.6%. Miners are also starting out in the red: Market Vectors Gold Miners ETF (GDX) is off by 1.5% and the Global X Silver Miners ETF (SIL) is sliding by 1.1%.
London-based metals consultant GFMS, a Thomson Reuters research and advisory unit, is predicting that gold will reach $2,000 an ounce in the second-half. That represents a revision from earlier estimates that the yellow metal would peak at $1,900 an ounce.
Net central bank gold purchases are expected to total at least $20 billion this year as emerging markets continue to buy up bullion, GFMS said in an update to its 2011 Gold Survey report.
Researchers also noted that central banks appear to be coming to the conclusion that gold is intrinsically more sound than most other perceived safe-have assets — including U.S. Treasuries, German bunds and the Japanese yen.
Gold for December delivery on the Comex is down $39.10 to $1,787.40 an ounce. Meanwhile, silver for December delivery is sliding 35 cents to $40.18 an ounce.
Analysts are closely watching the $1,750 level on gold to set a bottom to entice more investors back into the market. But technical signals continue to favor a resumption to longer-term bullish trends, notes Peter Lee of UBS.
Gold futures still remain poised for an accelerated move higher, he wrote in a research piece sent to clients on Thursday.
“However, we believe an ongoing consolidation phase may set the stage for continuation of primary uptrend,” Lee added.
He’s expecting an extension in gold’s current run to between $2,100-$2,150 an ounce. Lee added:
“If speculation develops, similar in scope to 1976-1980 then gold can rally to an extreme high of 2,205, longer-term or close to the inflation adjusted target associated with the January 1980 high at 2,300-2,400.”Lee sees key initial technical support for gold in the same area as several other leading technicians — around $1,740-1,750 an ounce. If prices don’t hold up at that level, he cautions that gold could then fade within the $1,675-$1,705 range. That would represent up to a roughly 7% fall from current levels.
