Gold Margin Hikes Clean Out Short-term Longs, Leaving Bullion Well Placed to Trade Higher

PRLog (Press Release) - Sep. 26, 2011 - Gold is one of the very few assets that remain in positive territory this year. In a sense, it is one of the last assets standing, and because of this as investors head for cash they sell the assets that have performed. Gold is in the 11th year of a bull market, the longest winning streak since at least 1920 in London. Futures reached a record $1,923.70 on September 6 as investors sought to diversify away from equities and some currencies. Central Banks are adding to reserves for the first time in a generation, joining billionaire investors including John Paulson in hoarding gold. The recent decline in speculative positions may mean that short-term longs are being cleaned out of the market and this point could leave bullion well-placed to trade higher when the current selling cycle winds down. Physical demand and investor buying after recent declines may point to a floor being nearby.
The world stock markets are seeing a modest bounce early Monday, following recent strong selling pressure. The European Union sovereign debt situation remains a major issue in the market place. There was no major breakthrough on the crisis during weekend meetings among EU and IMF officials. There is talk in the market place Greece will default on its debt sooner rather than later. The EU debt situation had been an underlying bullish underlying factor for gold. However, it now appears likely that the present problems regarding EU debt have been factored into present market prices and it will take a major new development on that front to significantly move markets.