Gold prices could crash to $600
MUMBAI: The last one year has been the most volatile year for the king of precious metals–gold. The prices of the glittering yellow metal that was going at $600 around this time last year skyrocketed almost double to touch $1033 some weeks back.
But the ‘golden’ bull run in gold along with crude oil price surge that had led to a frency in financial and commodities markets across the world seems to be over. These days, commodities have suddenly fallen into a lacklustre trading phase, even though the prices of crude oil and gold remain high compared to last year.
So is the bull run in gold really over? Will gold price further dip to $600 soon, if it goes down like the way it is going every day?
Yes, gold prices seems to be on a wash-out mode. It is on a disastrous downside run. On Monday, gold sank to a low $827 in the Yew York Mercantile Exchange, prompting some analysts to predict that the yellow metal prices could go down below $700.
“Yes, yesterday itself gold lost $28.50. It is a big body blow to gold, and it will be diffiult for gold to recover and surge ahead now,” said Adam Hamilton, a bullion analyst in London. His prediction is that gold prices could crash to $600, because of several global reasons.
Hamilton argues that the party is over for gold this year mainly because of two reasons. First, declining sales in countries like India, the largest consumer of gold in the world. Second, physical demand for gold has failed to accelerate as reduced power problem in South African mines are leading to production problems.
Another reason why gold is trading lower these days is thanks to the recession fears creeping in again with higher jobless claims, less than expected US GDP growth, lower non-farm pay rolls increased unemployment rate however.
It is not just gold alone that has been hit hard. Global funds and investors are these days moving their investments from commodities market, on receding oil prices. This has strengthened US dollar against major currencies, which is evident from the dollar index, which is closing higher almost every day.
Gold futures are on a falling spree in the Indian commodity exchanges also. On Tuesday, gold fell by 1.6 per cent today on the Multi Commodity Exchange following stockists selling, tracking weak global trend.
By Nandita Jain
commodityonline
