CNBC – Gold Pullback Presents Opportunity in the Long Run: Pros

Published: Monday, 14 May 2012 | 6:15 PM ET
By: Lee Brodie

Gold bugs are getting squashed.

During Monday’s session, the price of gold [GCCV1 1556.20 -4.80 (-0.31%) ] fell to a 4-1/2-month low to $1,556.61 an ounce, its lowest since December 30, 2011 before paring some of those losses.

For the past several months, gold has declined as growing turmoil in Europe sent investors into the safety of the US dollar [.DXY 80.92 0.31 (+0.38%) ]. A stronger dollar is bearish for gold as well as other commodities nominated in dollars because it becomes more expensive for investors using other currencies.

“Gold is under severe pressure. As long as the dollar is appreciating against the euro it will weigh on the price,” says Daniel Briesemann, analyst at Commerzbank in a Retuers interview.

“I wouldn’t be surprised if we test the December low of around $1,520 an ounce and if we don’t stop there we could go below $1,500.”

In the near near-term the forecast appears bearish.

However, if you have a long-term time horizon, the Fast Money pros consider the current weakness to be an opportunity.

“What I think we’re seeing right now is the decline squeezing some big players out of their positions,” says trader Guy Adami.

However, he sees the growing uncertainty and the ‘race to debase’ as two powerful bullish catalysts.

“A year from now, I expect gold will be trading north of $2000,” he says. Trader Steve Grasso is also positioned for upside. “I’m long the GDX [GDX 40.70 -0.27 (-0.66%) ],” he says, “and I’m not selling my position.”

Posted by CNBC’s Lee Brodie


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