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Gold breaks into death cross territory
by Sarah Miloudi on Feb 20, 2013 at 14:54
Gold has crashed into a death cross - an ultra bearish territory watched by chartists.
On Tuesday, the precious metal's 50-day moving average was set to break below its 200-day average, and according to analysts at Sharps Pixley, bullion has since rolled over.
With the spot price at $1,589 shortly after 2.30pm, gold's latest retreat marks a 0.94% drop on the previous day's trade.
In some respects, gold's weakness comes as little surprise given that prospects for the global economy are looking up and inflation fears are dying away.
But some investors are not convinced that gold's strong run is dead.
HSBC told its clients the metal's bull market remains 'intact', while exchange traded product (ETP) investors have been setting the stage for a bullion recovery.
According to Sharps Pixley, ETP investors last week beefed up their gold-backed ETP holdings to 2,602.3 tonnes, around 1% shy of last December's peak.
But in contrast, hedge funds have been trimming their commodity bets. The net long combined gold speculators' positions calculated by Bloomberg have dropped 11% week on week, with the latest fall taking them to a six-month low of 128,581 contracts.
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