Since then, gold has fallen more than 9 percent.
This evening alone, since futures markets reopened to begin the week, the shiny yellow metal is down 4 percent, to $1440 an ounce.
Below is the call Goldman's Damien Courvalin and Jeffrey Currie made on Wednesday:
We see risk to our updated forecast as modestly to the upside in the short-term should US data continue to disappoint but increasingly to the downside as we move through 2013. With investor conviction in holding gold waning and aggregate net long positions across COMEX futures and physically backed ETFs near record highs, we suspect that if our forecast for lower gold prices proves correct, the fall in prices could end up being faster and larger than we expect. In addition, a break through the $1,535/toz base to gold prices over the past eighteen months could further accelerate such a decline in prices.
Given our forecast for lower gold prices and the downside risks to our forecast later in 2013, we recommend initiating a short COMEX gold position as our ECS Top Trade #8, implemented through an S&P GSCI® front-month rolling index to further benefit from the contango in the COMEX future curve (1% per year). We are targeting a move to $1,450/toz compared to the current price of $1,585/toz with a stop at $1,650/toz. While we may be end up too early in entering this trade, we prefer that to being late given our belief that the skew to prices is to the downside .
Courvalin and Currie expect gold to fall to $1200 an ounce by 2018.
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