Category Archives: MCX | NCDEX

On last Wednesday when Federal Reserve decided to keep the interest rates in a range of 
zero to 0.25%, gold prices rose higher. The said interest rate range has been maintained 
since December 2008. As long as the US keeps interest rates low, the demand for gold would
 be robust and so would be its prices,analysts say. 

2. Weak dollar 

Weak dollar gives buyers the necessary appetite for gold. On last Friday, the Comex Gold jumped
 $25.2 or 1.7%, to touch $1556.4 on weak dollar. This was the fifth consecutive monthly decline of
 dollar. Analysts expect the slump to continue in the future. Gold prices always go opposite to the
 US dollar vectors. 

3. Global inflation 

It would be a cliché to tell that commodity prices are rising around the globe. And whenever inflation
 has risen, people have rushed to secure gold as a hedge. Metals consultancy GFMS predicts that gold
 prices will jump past $1,600 this year, driven primarily by fears of high inflation. 

4. Weak Europen recovery 

The debt crisis in Europe is worrying and may spread to US and Japan, accoridng to GFMS Ltd  the 
situation would perk up the demand for gold further and hence prices could go further up. 

5. Central bank buying 

The central banks have been on a gold buying spree since 2010. They became net buyers of gold last year,
 for the first time in two decades and added 87 metric tons in official sector purchases by countries
 including Sri Lanka, Mauritius and Bolivia. 

Russia alone purchased 8 tons of Gold in the first quarter. This shopping frenzy has reportedly added to
 the price of gold. 

6. Asian demand 

India and China are bitten by yellow fever. In 2011, the yellow metal exhibited a robust demand in
 India.The trend is continuing as per the World Gold Council report. 

In China, the peak season for gold arrives in the first quarter along with New Year and Chinese 
New Year holidays. This resulted in consumers purchasing gold to give away as gifts; particularly
 in the cities. In Vietnam, jewellery demand got a fillip in Q1 2011, climbing by more than 5 tons
 relative to the previous quarter– the Gold Investment digest by World Gold Council said. 

All these factors add to the prices. 

7. Chinese rate hike 

China has hiked interest rates several times this year to tame domestic inflation. Naturally, the rally in
 base metals subsided and what used to go to Copper and other base metals flowed to precious metals
 like gold and silver. 

8. Favourable Weather

In India normal monsoons have always bode well for farmers. And most of the farmers living in India
 turn to gold for investment after a robust harvest, since most of them do not possess a bank account. 

This time around, normal monsoons have been predicted and gold prices are slated to go up when other
 factors are considered: Akshaya Tritiya, marriage season etc.