Wednesday, 25 March 2015 18:07

Gold Down on Stock Market Rally and Global Economic Recovery

Written by 
Rate this item
(0 votes)

Gold at MCX fall by 0.51% and traded near to ‚28451 on strong equity markets and recovering global economies. Stable rupee has supported Indian stocks to attract foreign investment. BSE Sensex is trading near to 21146 the second straight annual gain. Index gained 9.03% YTD.

Major global exchanges gained substantially this year. US indices- Dow Jones, Nasdaq and S&P rose by 27.36%, 40.42% and 31.27% respectively, at Europe FTSE 100 rose by 14.15% while in Asia Nikkei 225 and Hang Seng rose by 56.72% and 2.55% respectively.Compare to these spectacular rise in equity markets Gold prices slumped by 27.82% or by $464 this year.

Gold ETF also dropped abruptly on Fed stimulus cut, on yoy basis. SPDR Gold shares, highly traded gold backed exchange traded product, plunged by 30.35% on 19th Dec by trading at 52 weeks low of $114.50.ETF Holdings dropped below 5 year average at 56.8m.

During the whole year major events played against the haven asset. In the beginning of the year the metal was in good demand but in mid of the year Fed comments related to tapering made investors bearish (April-May). Then after the US involvement in Syria issue boost the precious metal but again its peaceful solution deepen prices. Further, US Government Shutdown for two weeks put Gold as a better alternative of USD but the Democratic win slide down the metal price. At last Fed tapering for which market was waiting went on that eroded billions of dollars from Gold investment.

As on date Gold oz fell by 0.77% and traded near to $1203.8.Strengthening USD and sustained growth at major world economies may keep prices below $1200/oz in New Year. At MCX we may see Gold near to ‚28000 within this week.

Read 878 times Last modified on Thursday, 02 April 2015 13:14