Gold Prices Likely to Fluctuate Despite the Initial Hike in 2016

Delhi, February 3, 2016 (Newswire.com) - In the last four years gold had witnessed a significant 40% drop in price from $1900 to $1060. This low performance has suddenly witnessed a 6% hike of the rate a price rise of $1123 has been witnessed since the beginning of 2016.

However, speculation is rife about gold not maintaining this hike for long in the face of the expected rise in the US interest rates and growing market stability due later in the year.

Though gold does not move as speedily as stocks, it is just as unpredictable. According to gold analysts, the current 6% boom is due to safe haven urges of investors.

Since no interest is earned on gold, it will be difficult for investors to hold gold stocks for a long period of time. It is said that towards the end of 2016 gold prices will witness a bearish field.

Gold prices may even rise further for a short period of time, if there is a feeling of risk having been averted in the global economy.

However, if we understand Federal Fund rates to rise at the rate that we expect them to, then there is all possibility of a steep fall in gold.

Gold is predicted to fall to a $950 by the end of the year, the most bearish estimate fore-casted. The most bullish banks also forecast a very minimal raise in the price of gold from the current level.

Dismal gold sales ahead of the Chinese New Year are also an indication of the long term weakness in the gold market. The Gold market associations are blaming the gloomy global economy for it.

 In Singapore jewelers associations are of the opinion that people do not consider this precious metal as an investment, but more like fashion, therefore, keeping the demand for gold low key.

According to Mr. Nikhil Verma, Director, Jindal Bullion Ltd, New Delhi, India, “Gold will continue to stay alive and sought after the world over despite price fluctuations for its fashion strength and safe haven advantage.’’