Gold investors are bruised but not broken. But, the yellow metal is still vulnerable to another down wave of selling pressure. Last week's action and modest rebound was a "pause" to the bear collapse. Friday's bearish shooting star candle on the daily June Comex gold futures chart shows the bulls are unable to defend gains right now.
Given gold's recent fall from grace as gold ETF holders dump positions and rush for the exits, the yellow metal for now has lost its "safe-haven" cache—its appeal as a store of wealth as developed nations’ global central banks continue to embark on massive money-printing and quantitative easing ventures. None of those factors have disappeared: global central banks continue to debase fiat currencies with their current monetary accommodation, but for now the overwhelming sluggish global growth continues to hold inflation at bay, which has decreased the perceived need to hold gold for now.
Despite the recent collapse in prices, there remain strong and solid factors that argue for portfolio diversification into gold. Lower prices points ahead may offer savvy long-term investors and players a better entry zone.
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