Despite gold biting the dust last year, some analysts are the most bullish in a year on speculation that investors are reducing near-record bearish bets after the biggest plunge in prices since 1981. It is to be noted that gold suffered one of the worst performances in 2013 and fell to the levels that was seen only three decades ago.
According to a survey investors and some analysts are willing to take risk as they believe that gold will rise this week despite the fact that gold retreated for the first time in 13 years in 2013. This is happening as an improving economy spurring speculation the Federal Reserve would curb stimulus.
The Fed earlier decided that it won’t continue with the current rate of stimulus and will taper it to a great extent. The decision is expected to send tremors among investors; however, the overall economy is on the healthy shape and the decisions were just a matter of time. The Fed may decide on stimulus this month itself.
Gold prices go higher when economic uncertainties hover; however, as the U.S. economy is in the right shape, more than $73.4 billion were erased from the value of gold-backed funds as some investors lost faith in the metal as a store of value. However, this year seems better for gold as it rose to near a three-week high of $1,246.46 an ounce in London.
Earlier the last year, gold fell by 28 percent and the Standard & Poor’s GSCI gauge of 24 commodities fell 2.2 percent in 2013. The whole year did not seem to auger well for commodities as most of them fell to a great extent. The worse was gold which fell the past four months and reached $1,182.27 on Dec. 31.
Chinese Demand May Go Up
China is one of the largest consumers of gold and according to analysts purchases may rise before China’s Lunar New Year festival on Jan. 31. India which is the largest importer of gold could not import it more as the government imposed heavy duty on the imports, as it was causing huge drainage on the Forex reserves.
The poor demand from India was though compensated by Chinese demand for the yellow metal; it was not enough to boost the prices. However, this year, some analysts believe that Chinese demand will help boost prices to a great extent.
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