The prices of bullion declined today as investors are skeptical about the Federal Reserve’s decision to taper stimulus which according to market observers may curb demand for precious metals as an investment option. On the other hand, the World Gold Council in its statement said that China’s gold supply shortfall is expected to reach 700-800 tonnes this year.
WGC or the World Gold Council admits that the supply shortfall in China’s gold is due to strong physical demand as in addition to domestic production of over 400 tonnes, the total consumption in China is seen to exceed 1,000 tonnes this year. There have already been a lot of reports on the decline in the demand from the Indian market this year so far.
Declining Gold Prices, a Permanent Trend the Whole Year
The year has been remarkable for gold whose prices have tumbled 26 percent so far and according to some market observers it is heading for the first annual drop since 2000. This according to them is due to the loss of faith in gold among investors as they are not feeling safe investing in gold; a lot of investors are feeling better to invest somewhere else.
There was a drop in the bullion for immediate delivery wherein it fell 0.5 percent to $1,237.09 an ounce at 8:09 a.m. in London. Similarly, gold for February delivery dropped 0.9 percent to $1,236.20 on the Comex in New York. Prices of other precious metals fell to some extent; for instance, silver for immediate delivery fell 0.6 percent to $19.5738 an ounce.
Prices of Some Other Precious Metals
Following the trend in gold and silver, prices for platinum dropped 0.1 percent to $1,368.50 an ounce. A similar pattern was seen in the prices of palladium which declined 0.1 percent to $727.10 an ounce. Additionally, assets in the SPDR Gold Trust fell to 838.71 metric tons which are the lowest since January 2009.
Moreover, as physical demand for gold in India, the largest consumer of gold declined to some extent, its impacts are being seen in its prices. However, demand from China has gone up by nearly 40 per cent this year as the appetite for jewelry, bars and coins increased sharply due to a sharp drop in gold prices. Earlier India decided to discourage gold imports as it was widening up the current account deficit.
To contact the reporter of this story: Jonathan Millet at email@example.com