The gold market is holding and building a base at just above $1,200. We have been e-mailed by some people saying that the gold price should soon plunge, possibly to as low as $850. The gold market doesn't agree—that's why it's not falling. Perhaps it would be appropriate to look at the main reasons gold should fall and why it should rise.
Reasons Gold Should Fall
- If we are to believe the governments of Europe and the U.S., they have the government deficit problems, 'contained.'
- China's statements that it is continuing to buy Eurozone Bonds (and U.S. Bonds) calmed markets that feared the worst. This implies calm in currency markets from now on.
- The global recovery is holding, albeit slower than we thought.
- Investment demand could dry up anytime.
- Jewelry demand is not sufficient to hold prices at present high levels.
- De-Hedging has virtually stopped.
- Belief that the developed world economy will recover together with confidence, will lessen gold demand.
- Interest rates will surely rise to make currencies more attractive to long-term gold investors.
Reasons Gold Should Rise
How Will the Structural Change Affect the Gold Price?
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