Talking Numbers - CNBC | Yahoo Finance

Sponsored by
Talking Numbers

Why 2014 could be worse for gold

Talking Numbers

This may be one of gold's worst years in a while but don't expect gold to get any better in 2014, say two strategists.

Gravity affects all things. And, in 2013, it appeared to have an effect on gold’s price chart.

Since the start of the year, the yellow metal has lost nearly 29% of its value. With the Fed now tapering its bond-buying stimulus by $10 billion to $75 billion per month, gold took another hit and is down 3.5% over the last five days. According to two strategists, the shiny yellow metal may have some dark days ahead.

CNBC contributor Andrew Busch, editor and publisher of The Busch Update, says gold is very near the key technical level of $1,180 per ounce.

“If you get a close below $1,180, that would signal additional downside – and maybe even $1,000 – once you get past that,” says Busch. Nonetheless, he believes gold’s current levels are somewhat encouraging. “The fact that we're holding in at around $1,200 is a good sign for gold.”

Still, gold faces serious headwinds, Busch notes. “The short-term problem with gold, of course, is that short-term US rates have been rising, especially the 10-Year [US Treasury bond],” says Busch. “US growth is accelerating [and] stocks are doing great – All the reasons why you wouldn't want to own gold.”

Busch also believes that gold would actually benefit if it were sold off by large hedge funds. Should gold continue to keep its current levels in the face of that kinds of a sale, Busch believes it would prove gold’s strength. “I'd really love to see them dump more of their holdings and then have gold hold in there,” says Busch. “That would tell me that there's upside. But for right now, their positions are kind of overhanging the market.”

CNBC contributor Gina Sanchez, founder of Chantico Global, says rising US interest rates are negative for gold prices, even if those rates move up slowly. “You're looking at a situation that isn't supportive in the long-term for gold,” says Sanchez of increasing rates.

Several other factors are also not giving Sanchez much hope for gold. “In the short-term, you see the dollar strengthening. You see a lot of that risk premium is really not out there anymore. The markets are quite complacent. And, the economy is recovering, slowly but surely. All of those things bode poorly for gold.”

Sanchez says gold prices still haven’t taken into account all of these aspects. “I don't think that's all priced in yet,” says Sanchez. “I think that there is still quite a ways to go.”

To see the rest of the analysis by Busch and Sanchez on what’s next for gold, watch the video above.

More from Talking Numbers:

Big taper losers – and winners – in emerging markets
Get ready for a volatile 2014
Why Netflix has hit its peak: Strategists

________________

Follow us on Twitter: @CNBCNumbers
Like us on Facebook: facebook.com/CNBCNumbers

Rates

View Comments (119)

Recommended for You

  • Agents get subsidized 'Obamacare' using fake IDs

    WASHINGTON (AP) — Undercover investigators using fake identities were able to secure taxpayer-subsidized health insurance under President Barack Obama's health care law, congressional investigators said Wednesday.

    Associated Press
  • What a Marijuana ETF Would Look Like

    The changes taking place around marijuana for medical use and for recreational use are the biggest in almost everyone’s lifetime. There are quite literally billions of dollars up for grabs for those who ...

    24/7 Wall St.
  • China's rich pimp their planes as jet market takes off

    Shanghai (AFP) - When a Chinese customer asked for the interior of his new Bombardier Challenger 850 jet to be covered with pricey black carbon fibre, the designer was shocked -- but happy to oblige.

    AFP
  • CEO: Rivers to quit Clippers if Sterling stays

    LOS ANGELES (AP) — The interim CEO of the Los Angeles Clippers testified Tuesday that coach Doc Rivers told him he will quit if Donald Sterling remains the owner of the team.

    Associated Press
  • We Paid Off $90K of Debt in 4 Years

    One couple went into debt to give their son the education that he needed, eventually owing nearly $90K on credit cards. Here's how they paid it off.

    Credit.com
  • Despite sanctions call, UK approves arms to Russia

    LONDON (AP) — Britain is still authorizing the export of arms and military equipment to Russia despite the government's call for tough sanctions over Moscow's arming of separatist rebels in Ukraine, a group of lawmakers said in a report Wednesday.

    Associated Press
  • Play

    How to Build Your Own Annuity

    Instead of paying an insurance company, financial advisor Allan Roth recommends building your own "indexed annuity" that protects principal while giving market upside.

    WSJ Live
  • U.S. housing turning the corner, inflation creeping up

    By Lucia Mutikani WASHINGTON (Reuters) - U.S. home resales hit an eight month-high in June, suggesting the housing market was gradually regaining momentum and would help the economy to stay on a higher growth path this year. The third straight month of home sales gains, reported by the National…

    Reuters
  • Harley Davidson sputtering, Comcast loses more subs, Herbalife thwarts Ackman

    Today's trending tickers highlights moves in Harley Davidson, Comcast, and Herbalife

    Yahoo Finance
  • Goldman Sachs: Here Are 25 Small-Cap Stocks to Buy

    While Goldman Sachs is cautious on small-cap stocks due to valuation concerns, the firm still finds some pockets of opportunity among individual names within the group.

    The Wall Street Journal
  • China food scandal spreads, drags in Starbucks, Burger King and McNuggets in Japan

    By Adam Jourdan SHANGHAI (Reuters) - The latest food scandal in China is spreading fast, dragging in U.S. coffee chain Starbucks, Burger King Worldwide Inc and others, as well as McDonald's products as far away as Japan. McDonald's Corp and KFC's parent Yum Brands Inc apologized to Chinese…

    Reuters
  • Detroit retirees back pension cuts by a landslide

    DETROIT (AP) — A year after filing for bankruptcy, Detroit is building momentum to get out, especially after workers and retirees voted in favor of major pension changes just a few weeks before a judge holds a crucial trial that could end the largest public filing in U.S. history.

    Associated Press
  • New India government urges changes to World Bank

    India's new government has called for reforms to the World Bank structure to reflect the "emerging" clout of developing nations in a meeting with visiting bank chief Jim Yong Kim. The government, which took office in May, said in a statement late Tuesday that Finance Minister Arun Jaitley stressed…

    AFP
  • Play

    Chris Davis: The Key to Long-Term Investing

    Davis has beaten the index by looking at cash flow, not daily price changes. Plus: Why more than half of all mutual fund managers don't deserve your money.

    WSJ Live
  • Airlines ban flights to Israel after rocket strike

    JERUSALEM (AP) — A Hamas rocket exploded Tuesday near Israel's main airport, prompting a ban on flights from the U.S. and many from Europe and Canada as aviation authorities responded to the shock of seeing a civilian jetliner shot down over Ukraine.

    Associated Press
  • Herbalife Plummets

    Herbalife shares were down as much as 11%...

    Business Insider
  • Beef pollutes more than pork, poultry, study says

    WASHINGTON (AP) — Raising beef for the American dinner table does far more damage to the environment than producing pork, poultry, eggs or dairy, a new study says.

    Associated Press
  • JetBlue pilot among 6 arrested in Boston drug bust

    BOSTON (AP) — A JetBlue pilot from Florida is among six people arrested by Boston police over the weekend in an investigation of drug dealing incidents near the Boston Common.

    Associated Press
  • Microsoft CEO, Seeking Growth, Tells Managers to Step It Up

    The day Satya Nadella became Microsoft Corp.'s chief executive officer, he invited several dozen vice presidents to breakfast and had a simple, calm admonition for them: "Can you step it up?" The engineer's tone was a departure from the yelling and wild gesticulations favored by his salesman…

    Bloomberg
  • 6 Money Lessons You Should Have Learned Before College

    In a matter of weeks, the class of 2018 will be...

    Business Insider