I just love it when I'm proven right. I wrote something about soaring metal prices (gold especially) last month, which I said, were likely to fall because there were no clear fundamentals to sustain the high levels. This time, prices have fallen drastically, with copper and gold leading the way. The latter closed US$550/oz. which is about 21% lower from its all-time high of about US$700.
Political tensions over the nuclear stand-off with Tehran appear diffused, for the moment, while US oil inventories appear stable (again for the moment). So there was no justification anymore for metal prices to be at those levels. Metal issues were simply overbought.
The drastic fall only means the herd mentality took over, and price levels may be in the opposite direction now: metals are currently oversold. Which means, since there exist a healthy demand for metals (the rise in prices last month was simply overdone), a technical rebound is likely in the horizon. When fundamentals take a backseat, psychology takes over :)
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