According to HSBC, gold and silver fell as the dollar rose when Federal Reserve Chairman Ben Bernanke, appearing before Congress, stopped short of signaling readiness to conduct another round of bond purchases.
“The inability of gold to clear USD1,800/oz in recent days, the sharp increase in net long speculative positions on the Comex since the new year, and the paucity of emerging-market buying in recent weeks left gold vulnerable to a selloff, which dragged silver lower in its wake,” HSBC added.
“Declines of this magnitude, however, often attract emerging-market buyers and may also interest potential central-bank buyers. Buying from these quarters could soon staunch the decline.,” HSBC said.
“Furthermore, monetary policy remains accommodative not only in the U.S. but in other nations, the USD is still dogged by structural weaknesses, according to HSBC currency research, and global oil supplies remain vulnerable to geopolitically led disruptions. These factors should help reignite the gold rally, we believe,” bank concluded.
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