Gold Price is going down…Where is the support?

I haven’t reported on Gold prices for a while as it was going very good and many people were just enjoying a strong bear market and didn’t want to get out of it. Now the scene is totally different. As they say, “What goes up has to eventually come down one day”. This post might be bit late in giving you direction whether to get out of Gold or not but may help to understand why its going down and whether it is still not to late to stop buying and start selling to avoid losing more.

Where is GOLD going now?
As many of you are aware, Gold price is have gone down more than 10% in just a week or so. It has gone down 3% just today. As of today, Spot 24 Carat 32 oz GOLD is going in NY market for $1240 and change.

As many successful investors predicted, Gold prices will come down eventually when the economy gets better and people move away from the safe investments. But nobody knew when that day is going to come and looks it has come. GOLD started its decline in Feb 2013 when no one really thought that the time has come to depart gold. It started to get worse slowly every month and more bad when Fed announced its decision to end the bond buy back policy. See the graph below,

6 month gold graph as of Jun 26,2013

There are other multiple other reasons quoted for the drastic decline in GOLD Price.

1. A strong batch of U.S. economic data on Tuesday further bolstered notions the Fed will begin to wean the U.S. economy from its easy-money policies, which for several years have been a bullish underlying factor for the raw commodity sector, including the precious metals.

2.A cash crunch in China recently has also worked to reduce demand for physical gold in that nation

3. Also, major gold consumer India is also seeing slack demand for physical gold after the Indian government slapped additional duties on the import of gold in order to reduce its trade deficit.

My Prediction
if you see various economical factors in US and around the world, things are still not great. US economy is getting strong but jobs are not added much as expected and unemployment is still around 7%. All around the globe including Europe, China, India, all countries are facing tough economic conditions. Taking all into consideration, looking at 5 year graph below, the major support level are at $1200, $1100 and $900.

Gold 5 year graph

It is now close to $1200 and I would say it will continue to linger above $1000+ range for this year and may start to go down to $800 next year depending on how things are turning out. This is just my gut feeling and shouldn’t be considered as an financial advice.

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Location Map

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Warm wishes…