Is bull run in Gold over? Geojit Comtrade says yes
Geojit Comtrade has come out with its report on bullion. According to the research firm, Gold prices are all set to weaken towards the recent low of USD 1320 in the coming days.
Geojit Comtrade has come out with its report on bullion. According to the research firm, Gold prices are all set to weaken towards the recent low of USD 1320 in the coming days.
After being the poster boy of the so-called "Commodity Super Cycle" for more than a decade, gold prices have been knocked off their perch. Month of April witnessed prices enter a bear market territory with a 25 percent fall from its most recent highs around USD 1800 in early October. This article is aimed at looking at gauges’ that could be supporting this fall over for the Yellow metal.Strong showing from the Equity markets in the U.S is causing a shift in Portfolio……
There has been a recent shift in portfolio with investors taking likelihood for stock market as Dow and S&P 500 hit record highs. Since the beginning of the year, S&P 500 index has risen 13 percent while, gold prices have plummeted 13 percent. There is clear case of divergence between the gold prices and equity market. The yellow metal prices are failing to gain traction despite news that normally would have supported prices to scale higher, including persistent easing measures from Central Banks.Also, investors pulled back USD 6.77 billion out of the largest gold backed ETF, the SPDR Gold shares, according to IndexUniverse.Gradual Economic Recovery in the U.S…….likely to take the sheen of Gold
Recent signs are that, the U.S economy is gaining momentum and is nowhere close to the situation reminiscent in 2010-11 period, which saw Gold prices surging on growth concerns and inflating debts in the U.S . The job market in the U.S seems to have put its past behind and is looking up with Jobless claims falling to lowest in 5-years and companies adding more jobs.The housing sector in the U.S is emerging as the beacon of economic recuperation after languishing in the doldrums since the recession in 2009 and adding to the GDP for the first time since that period. The improving labor market situation in the U.S is assisting consumer confidence to improve and with spending contributing a significant proportion of the U.S GDP, situation of revival is impending for the U.S economy and financial markets.Geopolitical concerns seems fading…….trouble again for Gold
Many Geopolitical concerns that had driven investor appetite for Gold as a safe bet seems to have abated, given an improving market conditions in Europe and modest progress on the debt problems in the U.S.The Chinese growth story fading….alarming signs for the yellow metal
Chinese economy seems to be heading for a hard landing in the coming few months given the recent lackluster growth numbers. Chinese GDP for January – March quarter rose 7.7 percent from a year earlier weakening from 7.9 percent growth in the fourth quarter. The industrial production increased from a year earlier, but was well below the forecast of 10 percent. Escalating worries that Chinese consumers with less cash would buy less gold is further hurting Gold prices.Declining Gold prices…..Cheer for India
India is the world’s largest gold consumer with imports surging nearly 39 percent during 2006-2011 period. In the year 2012, India imported 860 tonnes of gold compared to 986 tonnes imported in 2011. India and China contribute almost 50 percent of the total consumption. High gold imports by the country have widened the current account deficit to an all-time high. Consequently, with a view to curb imports and rein current account deficit, Finance Ministry raised the import duty on gold from 4.0 percent to 6.0 percent earlier this year.The most imperative impact of the declining gold prices would be on the current account balance. According to the RBI, Indian gold purchases account for more than two thirds of the deficit. The current account disparity stood at staggering 6.7 percent of the GDP in October to December period, the largest level recorded dating back since 1949 with desired deficit considered being 2.5 percent of the GDP. Recent sharp decline in Gold prices could help reduce the country’s import cost by almost USD 7 billion by the end of March 2014.Prices are all set to weaken towards the recent low of USD 1320 in the coming days.Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions. 
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