Gold is at its lowest level in months, and it may be headed lower.
On Thursday, the precious metal dropped $4.90, to close at $1,254.40 per ounce, its cheapest price in almost four months. And for Steven Pytlar, chief equity strategist at Prime Executions, gold’s technical move spells further trouble for the metal.
After spending the last several months trading between $1,200 and $1,400 per ounce, gold settled into a consolidation pattern, according to Pytlar's chart. Earlier in the week, it broke below the consolidation.
"That gives us a projection basically back down to the lower bound, about $1,200 to $1,225," said Pytlar, using the height of the consolidation pattern to project a price target. "So, we do see downside in gold on the technical side."
Portfolio manager Chad Morganlander of Stifel's Washington Crossing Advisors said the fundamentals agree with Pytlar's call.
"Down," said Morganlander of gold. "It's going to go down."
Morganlander expects gold to fall 5 to 10 percent due to a stronger euro and improving U.S. economy over the course of the year. He has an alternative idea of where investors should put their money.
"There is a better investment vehicle and that's called equities," Morganlander said. "We would get away from gold. We would sell it or underweight it and go overweight equities."
"Gold is a valuable asset to have in one's portfolio at a particular point in time as a non-correlated asset class," he added. "So, there will be a time to invest back into gold, but just not now. The market condition, we believe, still has potential downside."
To see the full discussion on gold, with Pytlar on the technicals and Morganlander on the fundamentals, watch the above video.
- Markets & Exchanges
- Gold Investing