7th November Newspaper Notes - Increase and decrease of Gold prices in International Market

Downward trend of Global Gold Price – Latest market price of gold departs from its traditional reputation of being an over precious commodity. The latest market price of Gold is somewhere around $ 1148 per ounce. 3 years back in 2011 its price was at its peak of $ 1923 per ounce.

Understanding the increase and decrease of Gold prices in the international market – In the fateful year of 2008, when major economies of the World were reeling under the pressure of recession, reduced growth and high inflation, stock markets investment climate was incapable of inducing investors to pour their money in the markets. So investors took away their money from the stocks and invested it in Gold and other precious metals backed exchange traded funds. This surged the price of Gold in the market as the Gold at that time was a more profitable investment for them. But gradually that sentiment is changing. Reasons for that are as follows –

(a) US Federal reserve has put an end to its quantitative easing programme which has ended up introducing around 4 trillion dollar of money in the American economy which has improved the market sentiment and stock markets globally are feeling rejuvenated. With stock markets and investment climate improving it is more likely that now people would take out their money from Gold and other precious metals commodity and invest it in markets. Outflow of money from Gold commodity is going to decrease it value.

(b) Due to reduction in oil prices globally the import bill of many countries is going to reduce which in turn would reduce inflation thereby improving market investment sentiment which would ultimately lead to more investment in stock markets and less in Gold commodity as investment in Gold commodity is undertaken when market sentiments are very negative.