Bangalore: Gold made sideways movement last week but a fact to note is that despite dollar gaining during the last two days of the week, it continued to rule firm.
In fact, this is seen by analysts as a breakaway from the usual trend where gold tends to fall whenever the dollar strengthens.
One of the reasons for the rising trend of the gold despite dollar strengthening, perhaps, could be that investors, mainly funds, do not repose much faith in the stock market.
Otherwise, why would gold gain 10 per cent this year, whereas stock and bond markets have declined?
Certainly, gold is in for testing times but it is likely that it will overcome these hurdles since investors are looking for a safe haven to secure their income.
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A crucial announcement was made in Tokyo on Sunday at the Group of Seven industrialised nations’ meeting to sell the gold from the International Monetary Fund reserves from April 1 to overcome the current crunch deficit.
Such sales, in the normal course, could lead to fall in gold prices. But April is a long way off and a fall, if that happens, will only be temporary. The fall could only be to stabilise and bounce back even sharper, possibly to higher levels and as stated earlier in these columns, banks sales will all be gulped by the bulls in the market in no time.
Certainly, gold looks like it will rule firm. And $920 an ounce is seen as a firm support level for the yellow metal.
Two factors will help it to sustain this support. One is inflation and the other, the US recession.
Inflation
There is another development that is likely to happen in view of the US recession. The weakening dollar is already spelling trouble for the euro.
No doubt, the European Union is more keen on tackling inflation but how long will it do is the key here.
US recession
A strong dollar will only make Europe go the US way in recession and, therefore, experts see it attempting to weaken its currency to stimulate growth. That could see gold fortunes not hinging on the euro, which means the yellow metal could only head up.
In the short-term, gold could witness some sideway movements but it could be only a matter of time before it resumes its journey upwards.
Other precious metals
Meanwhile, platinum is seen as one that holds promise and very bullish. Silver, too, is seen gaining in tandem with gold.
On the domestic front, silver has broken the Rs 21,000-a-kg mark and there could be a further sharp rise in its prices. But, according to Dharmesh Bhatia of Kotak Commodity Services Ltd, it may not be sustainable and a correction is around the corner. Coal prices are also seen ruling firm due to power woes and China’s cold weather. But talk of recession could keep base metals subdued.
In fact, this is seen by analysts as a breakaway from the usual trend where gold tends to fall whenever the dollar strengthens.
One of the reasons for the rising trend of the gold despite dollar strengthening, perhaps, could be that investors, mainly funds, do not repose much faith in the stock market.
Otherwise, why would gold gain 10 per cent this year, whereas stock and bond markets have declined?
Certainly, gold is in for testing times but it is likely that it will overcome these hurdles since investors are looking for a safe haven to secure their income.
• Quarterly results of corporates: Check out
A crucial announcement was made in Tokyo on Sunday at the Group of Seven industrialised nations’ meeting to sell the gold from the International Monetary Fund reserves from April 1 to overcome the current crunch deficit.
Such sales, in the normal course, could lead to fall in gold prices. But April is a long way off and a fall, if that happens, will only be temporary. The fall could only be to stabilise and bounce back even sharper, possibly to higher levels and as stated earlier in these columns, banks sales will all be gulped by the bulls in the market in no time.
Certainly, gold looks like it will rule firm. And $920 an ounce is seen as a firm support level for the yellow metal.
Two factors will help it to sustain this support. One is inflation and the other, the US recession.
Inflation
There is another development that is likely to happen in view of the US recession. The weakening dollar is already spelling trouble for the euro.
No doubt, the European Union is more keen on tackling inflation but how long will it do is the key here.
US recession
A strong dollar will only make Europe go the US way in recession and, therefore, experts see it attempting to weaken its currency to stimulate growth. That could see gold fortunes not hinging on the euro, which means the yellow metal could only head up.
In the short-term, gold could witness some sideway movements but it could be only a matter of time before it resumes its journey upwards.
Other precious metals
Meanwhile, platinum is seen as one that holds promise and very bullish. Silver, too, is seen gaining in tandem with gold.
On the domestic front, silver has broken the Rs 21,000-a-kg mark and there could be a further sharp rise in its prices. But, according to Dharmesh Bhatia of Kotak Commodity Services Ltd, it may not be sustainable and a correction is around the corner. Coal prices are also seen ruling firm due to power woes and China’s cold weather. But talk of recession could keep base metals subdued.
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