Stocks started off the week on the wrong foot yesterday, as more euro worries forced major benchmarks to stumble out of the gate. The first quarter of the year was generally positive, but that momentum has shifted for the worse in recent weeks as investors and analysts have begun to worry about our economic future not only in the U.S. but for many nations around the world. But while equities have been having some trouble finding their footing, a number of commodities have been stuck in a similar rut, namely, gold [see also Three Reasons Why Gold Is Overvalued].After a monster performance in 2009 and 2010, gold quickly became an investor favorite as the precious metal could be used as a safe haven and a speculative tool. But the asset saw a slowdown in 2011 and has hit a wall in 2012. Though gold started off the year with gains, the commodity has slid more than 10% since February as investor appetite has shrunk along with the demand. India is the world’s largest consumer of gold, “But protests, boycotts, new taxes and, most important, a decline in India’s currency, the rupee, have kept domestic gold prices high and consumers on the sidelines. Such weakness in Indian demand weighs on world gold prices” write Biman Mukherji and Debiprasa Nayak.
As gold continues to dip, many investors are calling for a bottom and a solid entry point, but euro troubles and an uncertain investing landscape have painted a hazy picture. But the news isn’t all bad, many are expecting Ben Bernanke and company to ride to the rescue with a third round of quantitative easing in June. QE 3 would be very good news for gold and its investors as its price would likely spike in the short term. With gold currently sitting at a near five month low, an entry point certainly looks enticing [see also Is Gold Still A Safe Haven?].
After another dismal day in trading yesterday, today’s ETF to watch will be the SPDR Gold Trust (GLD). Sitting at such lows will put GLD in focus for the next few weeks, but today’s round of U.S. data will be especially important to keep an eye on if you are a gold bug. Today, the U.S. will release CPI and retail sales results, two data points that can have a large sway on the movements in gold. Look for this ETF to be active throughout the trading day as investors try to decide where this commodity is headed [see also The Ultimate Guide To Gold Investing].
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Disclosure: No positions at time of writing.