While the price of gold has reached record levels over the past several weeks, market analysts from Wells Fargo have predicted a significant reversal of this trend due to the speculative demand that has led to an overvaluation of the commodity, Bloomberg reported.
Traders at the firm have noted that past economic damage has occurred when investors tend to favor one market to the extent that gold has been used this year, something that may be reversed if the global economy recovers, reported the news source.
“There could be substantial risk to gold once the fear that the world is coming to an end subsides,” Dean Junkans, an analyst for Wells Fargo, told Bloomberg. “We are worried about the downward risk.”
Though analysts may have predicted the drop in value for the commodity, holdings in exchange-traded products that are backed by gold rose to a record 2,217 tons. Along with the increase in using the precious metal as a protector for assets, the December contract is at $1,786.40 an ounce, showing that investors still maintain confidence in the bullish alternative to currency, according to NASDAQ.