MUMBAI (Commodity Online): Gold prices have been on a parabolic rise this month shaking the confidence of even the gold bulls. The price of gold broke through $1900 earlier this week with speculations of $2000 claimed as a sure thing. But then one has to remember that bull markets do not end in a whimper but with a bang. Investors and banks have been warning of an impending correction in gold. The mass psychology and the self-fulfilling nature of this rising belief might actually come into play and cause prices to tumble despite the weak economic outlook since the value of gold is determined by investor perception. Gold is currently trading almost $400 over the 200 day moving average, becoming increasingly vulnerable to sharp pullback. “From a purely technical standpoint, I think it'd be wise to take some chips off the table," says Mark Luschini, chief investment strategist at Janney Montgomery Scott, Reuters reported. Barclays capital has also echoed concerns of a temporary correction citing slow seasonal demand. Edel Tully, UBS metal strategist said that the Swiss bank "has certainly noticed an increase in clients looking to book profits”. He also cautioned that the risk of CME raising its margins is also increasing. Meanwhile Citigroup, in a note, warns that "Even a slowdown, let alone a decline, in net investment flows can have a materially negative impact on the Gold price from current levels." Investor Dennis Gartman, who forecasted the 2008 commodities slump, has also cut his gold positions.

Source