Take physic, pomp

Goldman Sachs stopped out of its gold short trade

This received from A. Reader this morning, is the header of today’s Goldman Sachs note to clients that announces they’re closing their short position at a loss. Oh, doesn’t that make me feel sad…
1. As detailed in US Views: Stepping Back, published
May 8, 2016, our US economists recently reduced their forecast for Fed
funds rate hikes over the next 12 months from 100 bp to 50 bp.
Corresponding with this, our global rates team has lowered its forecast
profile for 10-year US real rates over the same period (see 
Macro rates views: Lower Rate Forecasts, But Reflation Theme Intact,
published May 10). As a result, we reduce the downside to our gold
price forecast, raising the 3/6/12 month forecast profile to
$1,200/1,180/1,150/oz from $1,100/1,050/1,000/oz. Our new year average
price forecasts for 2016/17/18 are $1,202/1,150/1,150/oz from
$1,124/1,000/1,050/oz. Though we forecast that gold prices will decline
from spot over the next 3-12 months (with c.5%-9% downside), for reasons
which we detail below, the changes to our economists’ rates forecasts
act to reduce the degree of downside to our modelled gold price profile
and thus change the risk-reward of our previously implemented short gold
trade recommendation (published February 15), which we close as a
result at a c.4.5% loss.

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