Gold price has been under pressure due to a stronger U.S. dollar and broad-based selling in financial markets

The gold price traded lower at $1,625 per ounce Wednesday. After breaking below $1,700 per ounce yesterday, gold prices failed to mount a rally this morning. The gold price has been under pressure due to a stronger U.S. dollar and broad-based selling in financial markets – plummeting $44.86, or 2.6%, during Monday’s session. With its decline, the spot price of gold dropped to its lowest level in seven weeks and extended its loss in December to 4.5%.

As for the gold price, Dennis Gartman – long-time commodities investor and author of The Gartman Letter – wrote on Monday that “We shall continue to reduce our exposure to gold and we had hoped to increase our exposure to equities, moving eventually to balance this position, holding equal sums of gold and equities while being short of the EUR.”

However, Gartman noted that with the recent uptrend in the euro-denominated price of gold breaking with yesterday’s sell-off, he sold his entire position in the gold. Although he acknowledged that he would consider buying back investments tied to the gold price in the future, Gartman did not provide a time frame or a particular level at which such purchases would be made.

While Gartman effectively sounded the alarm on the gold market – at least in the short-term – UBS analyst Peter Lee presented a more neutral stance. In a note to clients, Lee forecasted that the gold price is likely to stabilize in a trading range between $1,600 and $1,750 per ounce for the remainder of the year. Subsequently, Lee predicted the gold price will resume its rally. “We continue to favor gold over other commodities as geopolitical and economic uncertainties persist,” Lee wrote. “Since the prevailing primary trend is up we expect gold will resume its uptrend and retest its $1,923 all-time high.”

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