Quantcast
Other Stories

Seasoned observers of markets say that December is a weak month for commodities. It could be the year-end effect, a sort of psychological resignation taking over the markets only to make a comeback in January.

06 Dec 2012

By Rakesh Neelakandan
The current blood bath in gold can have many reasons. I would come up with three reasons, the not-so-common-ones, the reasons that may sometimes be obvious but get missed more often. I would rather focus on the micro aspects of the reasons than their macro. And these reasons bank on a trader's sense rather than long term investor's sense.

Reason 1: Subdued trend in crude oil prices

Crude oil has seen dwindling of its gains. Brent crude currently is ruling below the magical $111 barrel mark even as its trans-Atlantic counterpart is at $87 levels, way below its previous surge levels. It has to be noted that people do channel the money they book as profits in crude oil to gold.

When crude oil prices go up, there is a tendency for gold to come down. So, when it happens, traders generally sell crude oil and buy gold and vice-versa.

With crude prices ruling low, the scope is less for traders in crude oil to book profits and invest in gold contributing to bearish sentiments.

Reason 2: Uptrend in stock markets

Stock market uptrend in India has made a dent in gold prices here. As stock markets rule high, traders opt for an investment in stocks rather than in commodities. Since a major chunk of investors invest in metals-energy complex; when the stock markets rise, the said complex, including bullion, suffer the most on routing of money.

Reason 3: December effect

Seasoned observers of markets say that December is a weak month for commodities. It could be the year-end effect, a sort of psychological resignation taking over the markets only to make a comeback in January. (rakesh@commodityonline.com)


YOUR RESPONSE
Click on the image to reload it
Click to reload image
COMMENTS (1)
JP1110105
06 Dec 2012
Number #1 Reason: A pattern of repeated orchestrated slam jobs to take down the price gold and sivler. Number #2: The market 'sheriffs' are in bed with the crooks. For example: A Millisecond Analysis Of The Latest Gold Smackdown zerohedge/news/2012-12-05/millisecond-analysis-latest-gold-smackdown Many other examples. Just look
Name Email
Post
Reply

@2013 COMMODITYONLINE ALL RIGHTS RESERVED