Even as investors all around the world are pitching for gold what is reining in gold prices in India. If you examine near past trends, gold, after being in the grip of bears for the most part of the week, recovered during the weekend. It gained 3% to close at $847.2 an ounce but during late fixing, it slipped to $833.75, indicating the continuing volatility.
So, gold is not high as expected. The reason is the global meltdown impact. In reality, people have stopped buying the yellow metal from spot markets because of the lack of liquidity. Even though people are sure about the prospects of gold, they are not buying it from the market because for the prices are still soaring. What is keeping gold under restraint are low physical demand and less money with investors to buy the yellow metal. Following this trend, there are expectations that gold prices may crash to $500 per ounce on lack of demand. After touching $1,030 an ounce in March last, gold has been witnessing towering volatility.
During the last week of December, gold touched $890 before reducing to nearly $800. Analysts have put the average price of gold this year at $825. The key reasons for gold falling prey to bears is that demand for it is the lowest in almost a decade. Because, prices are very high for buyers still. Technically, $895 is seen as the main resistance point for gold. Support for it is around $808.The precious metal gold, has gone below one of the key support level of $841 and has not been able to scale over the short-term resistance of $868.
Though, gold’s prospects seem to be bright in the long term. Because the wealthy people are buying gold bars as an investment. Because those who have wealth know that gold is the best option for them to invest. The rich people want for gold bars as they are worried over how economy would behave this year. So, investors favor physical gold over even exchange-traded gold funds.
The present global situation is such that there is a fear that deflation may set it. In that case, there is nothing safer than gold. Silver is set to tail gold, while the platinum group of metals will see some glow only on economic revival.
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