There is good news for gold buyers as prices of the yellow metal are at their lowest since April 2010. On Friday, gold touched Rs 25,920 per 10 grams ($1,134.4/ounce), and is likely to fall, not rise, in the near future. Some say it is due to US Fed chief Janet Yellen saying the easy money policy will be tightened by the yearend as the labour scene has improved. This means the holding cost of gold will be higher, and that gold is no longer needed as a safe haven. Gold always benefits as the dollar weakens.
But there is need for caution as Ms Yellen seems to blow hot and cold; and one can’t really be sure about the Fed rates. She also said: “I want to emphasise the course of the economy and inflation remains highly uncertain, and unanticipated developments could delay or accelerate this first step.” This blow hot-blow cold is going on since April, when the first cut was expected in June, then September, and so on...
Gold buyers can thus buy while the going is good. This is what Indian traders are doing. Top jewellers buy up gold at every fall in preparation for the coming festive season. Jewellers are also trying to attract customers by offering 100 per cent discounts on making charges. China, the world’s largest gold consumer, is also buying up large quantities of gold and is said to hold 1,658 tonnes at present, the fifth biggest holder of gold reserves worldwide, ahead of Russia.
