A stong push by way of Asian demand has increased Gold prices even offsetting the effects of a strong US dollar. The strongest countries behind Asian demand are China, India, and ETFs.
The spot price of gold way up 10 basis points by mid-day Monday, partially offsetting losses experienced over the past several weeks.
The Dhanteras and Diwalitwo Festivals
The Dhanteras and Diwalitwo are two important Hindu festivals and both involve gifted gold. These are celebrated at the end of this month. While positive, other indicators such as measures of the US dollar’s buying power are negative for gold. Against a basket of consumer goods, the US dollar has become more powerful.
Interest Rates and the US Economy
Behind less positive forecasts on gold lie strengthened US economic expectations. By comparison, the Euro has been sinking despite Central Bank increasing asset-buying stimulus funds similar to US quantitative easing.
Decreasing “cheap money” expectations, in other words, increasing interest rates over the long term, can deter gold value. This is due to a higher perceived opportunity cost (measured as the next best investment) of owning gold.