Gold looks increasingly like a cash cow that’s long overdue for milking

Analysts at Scotia Mocatta presented a rather bearish comment on gold in a note to clients yesterday, contending that lower prices are likely for the gold in the near future.

“The North American market definitely squeezed out some European shorts yesterday but another failure to break $1800 really didn’t bode well for gold’s overall prospects yesterday,” the firm wrote. ”Although there has been some fresh ETF demand in general gold has been walked higher in recent days and frankly it really hasn’t been performing that well.”

Scotia Mocatta went on to say that “With governments falling left and right in Europe if there was ever a time that gold should be pushing the envelope as a safe haven then it’s now and it’s simply not happening – so why isn’t it happening? We think the reason is it remains a very overcrowded trade and if it’s hard to attract fresh buyers in the current environment.”

Couple this with the fact that people need cash in either a ‘risk on’ or ‘risk off’ environment,” the firm added, “and gold looks increasingly like a cash cow that’s long overdue for milking.”

As for specific targets on the downside, the firm asserted that “When $1750 breaks the 100 Day MA at $1692 will past be in play…although there will be pockets of support along the way.”

The firm did not provide a longer-term gold price target, however.