With the surge in stock market in last few months, we are also witnessing greater number of people trading in commodities. Gold prices have reached the magical figure of Rs.18000 (Per 10 gm) for the first time. It is approximately 1141 dollars for ounce of gold. There was a time when gold, oil and market were running parallel. But the trend has changed now there has been no relation whatsoever between the 3 any longer. So what is behind this big rally in gold prices? Last year, gold prices were hovering at $ 800-plus per ounce. Those who had invested in gold at that time have made a clean profit of $ 350 per ounce of the precious metal. Lots of money, indeed, if you had bought few ounces of gold. But the million dollar question is how long will this boom continue and where is gold price headed?
Most of the experts in market think that the gold price boom is artificially made, to a large extent, by clever bullion traders and speculators at several commodity exchanges across world led by the US Comex, who are selling gold contracts these days frantically to make lots of money. One argument from the spectators for the surge in gold prices is that the US dollar value has been plunging thanks to the collapse of several banks in America and the great ‘economic depression’ that have hit the world’s wealthiest and powerful nation. But US being the largest gold holder, the value of the yellow metal going up has increased the valuation of US reserves. Another argument for the big rise in gold price is the fact that central banks across the world are buying gold reserves heavily in an attempt to get rid of US assets held in dollars.
Is it a correct strategy for the central banks? Reserve Bank of India (RBI) surprised the bullion world early this month by buying 200 tonnes of gold from the International Monetary Fund. So the Next question in the market is “Gold prices will go upto $2000 or it wil crash again to $800″.No matter where it goes right now the marriage season getting badly affected in terms of buying of gold jewellery.
This article is contributed by Sapan Kadakia who is currently studying in MICA.
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