Gold in a bear hug: US recovery, stronger dollar to temper prices
The price of gold has been falling amid expectations of a US economic recovery and a stronger dollar. Domestically, too, gold prices have been falling. And this trend will continue for some time more, analysts said.business Updated: Aug 16, 2013 00:09 IST
The price of gold has been falling amid expectations of a US economic recovery and a stronger dollar. Domestically, too, gold prices have been falling. And this trend will continue for some time more, analysts said.
“In India, the yellow metal is hovering at Rs 29,000-levels due to a weak rupee and measures taken by the government to curb gold imports,” said Kunal Shah, head, Commodity Research, Nirmal Bang. Most analysts expect gold prices to fall about 10% from this level.
“Gold prices are under pressure and trading in range of $1,270 (Rs 77,470) to $1,350 (Rs 82,350) on speculation that the US Federal Reserve will start tapering its bond buying programme from September," said Renisha Chainani, commodity analyst, Edelweiss Financial Services).
The improving economic scenario in the US is expected to keep gold prices under pressure. Gold prices, typically, rise when the US economy is in trouble as investors leave other asset classes and buy gold.
When the US economy improves, investors move away from gold to other asset classes, thus, bringing down its price.
"US spending cuts will affect gold and all major commodities, which can head downwards," said Ashok Mittal, co-head, retail, Emkay Global Financial Services.
Some analysts, however, expect gold prices to rise marginally, but the projected increase may not be large enough to offset the risk of losses if prices fall.
First Published: Aug 16, 2013 00:02 IST