It’s too soon to call a bottom in gold, said Deutsche Bank, the largest bank in Germany, in a weekly commodities report.
The German bank continued that, “The metal first surged sharply, then fell back, as market expectations for another round of United States quantitative easing first rose and then abated over the past week.”
Analyst with Deutsche Bank stated that “While we expect gold prices will eventually rally, we believe it is too soon to call a floor in the gold price given the ongoing downside risks to the euro in response to banking problems in Spain and the Greek elections on June 17th.”
Meanwhile gold has the best performing component of DBLCI. However, the rebound in returns has only occurred in the past week following a softer US payrolls report and the prospect of additional measures to stimulate the US economy and hence weaken the US dollar, they added.
“We believe precious metal returns remain vulnerable to ongoing US dollar strength,” Deutsche Bank concluded.
Deutsche Bank has a large presence in Europe, the Americas, Asia-Pacific and the emerging markets.
Source: Commodity Online