By Geena Paul
NEW YORK (Commodity Online): Global gold prices may witness a fall following the International Monetary Fund’s (IMF) forecast for the 2010-11 financial year. The IMF said India and China will perform better than expected and the global economic recovery is faster than it had anticipated.

IMF expects Indian economy to grow by 8 per cent during 2010-11, though high inflation and rising fiscal deficit would continue to remain areas of concern. With India’s long-term prospects remaining strong and private sector balance sheets sound, IMF expects growth to be back at potential in 2010-11 even if advance economies grow below trend.

For the current fiscal, the fund said the economy would grow by 6.7 per cent, much lower than the 7.2 per cent projected by the Central Statistical Organisation. The major areas of concern, according to IMF, are the rising inflation and high fiscal deficit.

However, global economic recovery is proceeding better than expected allowing a global growth forecast of four percent this year, IMF said.

In January, the IMF predicted that the global economy was bouncing back but warned that stimulus was still needed to support the recovery.

This IMF forecasts are sure to have an impact on gold prices as the yellow metal had made major strides during the recession period due to panic buying by investors.

With the IMF drawing a rosy picture for the global economy, investors are likely to pull out their money and put it in equity and other investment options.

This move may impact the gold prices and the yellow metals may not make big strides in the coming months as predicted by bullion analysts. In fact, gold is a lover of tragedies and whenever there is a disaster gold prices gain because people tend to buy gold during crisis times.

In its quarterly assessment of China, which is poised to overtake Japan this year as the world’s second-largest economy after the United States, the World Bank raised its forecast to 9.5 per cent growth for 2010 from the 8.7 per cent it projected in November. It also estimated that growth would slow somewhat next year, to 8.7 percent.

A huge stimulus package and ample lending by China’s government-controlled banks helped its economy avoid a recession last year. China grew 8.7 per cent in 2009, less than in previous years but still a huge gain, especially when compared with the drop in gross domestic product that hit most other leading economies.

Exports, a main driver of growth, also recovered briskly from their sharp fall in early 2009, allowing China to gain global market share last year.

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