FinHow

Gold price fell today to its lowest level in last 20 month to Rs 26,350 per 10 grams (Reference Gold falls to 20 month low on sustained selling). There have been multiple theories explaining the fall of precious metal.

 

1. US Economy is improving faster than previously expected and there is a speculation that U.S. Federal Reserve may end its quantitative easing sooner than expected (Reference Why Gold is Going Down). Price of gold is inversely proportional to value of USD. At present, USD is appreciating so price of gold is falling in international market.
2. Price of gold has been rising since Sep 2010 and profit booking can be a reason. (Reference Commodity Corner: Why are gold and silver falling?)
3. Mass media speculating end of gold bull can be fuelling the sell-off of gold (Reference Why Gold is Going Down).
4. Technical selling – Gold had the support price of USD 1,530 to 1,550 and it was hovering well over that level. Once it breached the support level, gold was bound to fall further until the next support level is reached. (Reference Scariest part of gold crash? No one knows why it happened] and Why Gold is Going Down).

Gold is going down but it is not expected to get too cheap. Let’s keep our fingers crossed as to what level it will reach.