* Gold could retest $1,535-1,485 area in near term-CitiFX
* Becomes risk-off trade; nervousness has further to run
NEW YORK, Oct 18 Gold could fall below $1,500
an ounce in the near term, as bullion has underperformed other
assets and appears to have lost its safe-haven appeal, CitiFX
said on Tuesday.
The technical research arm of Citigroup said,
however, it still expects the precious metal to rise above
$2,000 an ounce after a correction, and it will eventually
trade as high as $3,400 an ounce.
"Gold has gone from being a protection against 'risk off'
to a 'risk-off trade' in itself...We still believe that this
market nervousness has further to run in the coming weeks or
months," CitiFX strategists said in a note.
CitiFX said that there is a high probability that gold will
at least retest the area down around $1,535-$1,485, and
possibly lower still."We would not be a buyer of gold for the foreseeable
future," it said.
In recent weeks, gold has underperformed major currencies,
fixed-income products, crude oil, and has outperformed equities
by not as much as other asset classes, CitiFX said.
"When a hedge to risk starts losing money in an anti-risk
environment but rallies in a pro-risk environment, something is
wrong," it said.
Gold -- traditionally a safe haven in times of economic
uncertainty -- slumped 1 percent in the last two sessions,
moving in lock-step with riskier assets such as equities, which
ended sharply lower on Monday.
On Tuesday bullion ended down 0.5 percent at around
$1,660 an ounce, after partially recouping deeper losses
despite a late-day U.S. equity market rally.