Reportedly, gold is catching in the market after the four-month low prices amidst the indications that the demand for gold is going to increase after the signals from the U.S. Federal Reserve may reduce monthly bond purchases in the coming months. The gold prices are also going to increase as China’s gold consumption may surge to a record 1,000 metric tons in 2013.
According to various surveys conducted China’s demand for jewelry, bars and coins rose 30 percent to 996.3 tons in the 12 months to September. Though there has been a significant decrease in the demand from India which is always at the first position when it comes to gold consumption. This year so far, India usage has gone up by just 24 percent to 977.6 tons.
The London-based World Gold Council earlier in its report indicated that India imposed heavy import duty on gold as it wants to tackle the current account deficit and that has led to loss in the Indian market for gold. India, a country which has huge gold consumption determines a lot where the gold prices are heading to. However, this year the government willingly discouraged the imports.
The gold prices increase a lot when the investors and trades start believing that liquid investments in stocks and shares do not pay better than gold which is often considered one of the safest investment options. However, some market observers believe that it is difficult to get too bullish on gold premised on strong physical demand while investors continue to remain bearish.
Currently gold is trading at $1,245.90 an ounce on the Comex and expected to fall further by the end of the next year as according to some investors and experts, it may drop to $1,050. In fact, gold prices have been heading southward for the first drop since 2000 this year as investors cut holdings. Additionally, futures lost as much as 2.6 percent during yesterday’s trading, particularly, after the Fed signaled that tapering may start in the months ahead.
Reportedly, commodities tracked by the Standard & Poor’s GSCI Index lost 5 percent in 2013 so far. Whereas corn supplies surged, the decision on the part of the Federal Reserve regarding stimulus tapering is concerning the investors. In fact, Goldman has announced that the forecast losses for iron ore, gold, soybeans and copper as significant.
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