Strategists at Deutsche Bank said much of gold’s correction may have already happened, in a note on Monday. Gold has come down over 30% from a peak of around $1,900 an ounce in September 2011.
“Lessons from history suggest that although gold-price losses have been extreme, the extent of the price correction today is still some way short of the percentage declines that occurred in 1980-1,” said Michael Lewis and other strategists in a note.
“However, we would classify events over 30 years as significantly different since at that time, U.S. short-term interest rates rose to 20% with real interest rates also rising rapidly.” As a result, he said, they still see Fed policy as a strong headwind to gold returns. Therefore “it is possible that the major part of the gold price correction has already occurred.”
Gold for August delivery GCQ3 +1.42% rose $15.90, or 1.3%, to $1,228.40 an ounce on Monday.
