Gold values have plummeted since the US Federal Reserve's statement last night, now sinking to
two year lows of $1,319.76 per ounce 2010 lows of $1,304 per ounce below $1,300. Shares in gold miners are also down.
On Monday SocGen analysts predicted gold would fall to $1,200 per ounce by the end of the year.
Bank of America Merrill Lynch note:
We stress test free cash flow under a $1200/oz scenario, and believe that African Barrick, Hochschild and Petropavlovsk could struggle to maintain their current level of cash dividends.
Last night's statement was dovish, so we would usually expect gold values to rise, as it is considered a good store of value as fiat money becomes less attractive. Perhaps traders are reacting to the improved Fed forecasts, suggesting that a recovery is more concrete than thought.
Gold getting whacked -4% on a dovish FOMC statement and $85bn in continuing QE. What happens when we actually normalise monetary policy?— Owen Callan (@OwenCallan) June 20, 2013
@daveirl if u look at the chart, the initial fall happens after Ben last night, and then right at the European open this morning.— Owen Callan (@OwenCallan) June 20, 2013