The gold is now in a “bubble that is poised to burst” as investors go for it on a speculative demand, following a surge in prices this year, according to Wells Fargo & Co.
Analysts from Wells Fargo said, “We have seen the economic damage of past bubbles and feel compelled to ring the warning bells.”
Gold futures have moved up 26% this year after its 10th straight annual rise. The price was up to a record high of $1,817.60 per ounce on the 11th of August. Investors flocked to get gold as much as they can due to increasing woes about the problems in the United States and the European Union.
Dean Junkans, one of the leading analysts from Wells Fargo said, “There could be substantial risk to gold once the fear that the world is coming to an end subsides. We are worried about the downward risk.”
Holdings in exchange traded products that are backed by gold went up to a record high at 2,217 tons on the 8th of August, according to information compiled by Bloomberg. CME Group Inc announced that volume in Comex gold futures and options were up on the 9th of August to a record high of 504,368 contracts. This is a big jump from the previous 469,689 on the 28th of July last year.
Gold futures due in December were up by $27 or 1.5% at $1785, which is considered one of the biggest settlements in history.
Tags: downward risk, big jump, Wells Fargo, comex gold futures, economic damage, European Union, wells fargo co
