MarketWatch: "Gold GCQ3 +1.39% has tumbled more than 30% from a September 2011 peak above $1,900 to under $1,300 presently. Gold was up about $20 on Monday, rebounding from a selloff late last week. A short-covering bounce and some safe-haven demand on Egypt unrest helped, says Kitco’s Jim Wyckoff.
So here’s the Deutsche Bank rationale: There have been worse gold fallouts, such as that of 1980-81. During that time, gold hit a record $850, plunged to between $300 and $400 and stayed there for years before resuming its upward trend. However, as strategist Michael Lewis points out, the difference between then and now is significant. Over 30 years ago, U.S. short-term interest rates were as high as 20%, and real interest rates were also rising rapidly. Short-term rates are today between zero and 0.25%, and real rates have been at 0.10% since December 2008.
“As a result, while we still view Fed policy as a strong headwind to gold returns, it is possible that the major part of the gold price correction has now already occurred.”"
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