Last Updated : 22 January 2010 at 17:50 IST
Is gold price set for crash below $1,000?
- Precious, base metals may trade mixed as upbeat US GDP bolsters Fed QE taper
Spot gold prices fell around 0.7 percent today taking cues from mixed global market sentiments. Also, decline in SPDR Gold holdings by 4 tonnes yesterday acted as negative factor.
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After the historic boom, is gold price climbing down to $1,000 per ounce, to confirm to the controversial prediction that noted economist Nouriel Roubini made some weeks back? It looks so as gold is going bearish, in the weight of economic nervousness coming from the two important countries that matter—United States and China.
Now, as gold sank to a three-week low on Friday across the global markets and commodity bourses, some bullion analysts warned that gold price could plunge below $1,000 per ounce if the talks on property bubbles from China and financial risk taking concerns in the US are going to intensify.
“Gold is on a bearish mood these days after the precious metal’s spectacular ascent to the record high of $1,227 per ounce in November last year. Gold price may not boom above $1,227 this year, if commodities get into a slump in 2010. A crash in gold price below $1,000 per ounce can not be ruled out,” said Mark Robinson, a bullion analyst based in Dubai.
According to Robinson, the main problem with gold is that “its price has been over-hyped by some bullion analysts and forecasters.” “It is funny to see so many gold predictions going around in the search engines on the Internet. Gold price is being predicted from $1,000 per ounce up to a whopping $5,000 and even $10,000 by analysts and investors ranging from Jim Rogers, Marc Faber and Nouriel Roubini to research assistants in small broking firms,” Robinson told Commodity Online.
While Robinson agrees that gold is the most valuable asset among commodities and the yellow metal is arguable the best investment asset class in the world, he points out: “But there is so much hype going on in the bullion market on gold price. The hype lacks basic fundamentals like gold mine supply, demand and possible emergence of other commodities like platinum, palladium and silver as equality challenging investments like gold.”
But, all said and done, what are the real reasons that are prompting investors and bullion traders to press the panic button on gold price?
There are three immediate reasons why gold price is plunging.
- India Crude Oil remains bullish, Copper may trade positive bias
- World Coking Coal supply may remain stable in Dec 13: TSI
- Beat Gold bears with Long position in Gold ETF options
- US Crude Oil rises further on stockpiles drop, Gold falls after short covering rally
- The conflicting economic and religious views on Speculation and Money
- India Crude Oil gets support from fall in stockpiles, Copper sideways