Gold had a crash and now it is rising. People have heard enough about the rise and fall of gold taking place and there have been many arguments forwarded to know about this but the gold suspense goes on. On one hand, there are projections suggesting that this price rise is temporary and will not persist long and on the other hand, there are also contra-arguments. The reason about so much of concern on the gold is that it is still the ultimate product for the investors. One more news regarding the gold prices has come up and we will try to look into it which is fair enough.

Now, there are experts who say that gold is rallying these days because of the increased practice of the hedge funds which happened as the central banks in Europe showed no signs of economic stimulus. This situation made the prices go up further. But there are still confusions regarding the gold prices in recent coming days. When we look at the present trend of gold contracts in the international market, 19 percent of increment is seen in the net long-position of the various forms of the contracts- basically resulted due to the funds and the large speculators in the market. In USA, the data of the Commodity Futures Trading Commission show that the holdings of the short positions of the contracts have come down by 9.2 percent.

What signs did the major economies show when the gold prices crashed down- the Federal Reserve increased its buying of the bonds whereas the European Central Bank brought down the borrowing costs to the lowest possible. One might find it interesting because generally USA seemed to use fiscal policy to its economic resolution and the European region using monetary policy for economic recovery but this time, USA also went for the monetary policy itself and by buying more bonds, USA is actually trying to maintain its reserves with a less-risky portfolio.

The billionaire investor Warren Buffet also mentioned that though the yellow metal had a slump, it does not have enough of the appeal left. Such statements by one of the richest investors in the world evenly look to drive a mass of small investors. One of the senior strategists in a reputed investment firm says “The bulls still have to prove a lot. There is lot of skepticism surrounding gold. We have to watch to see if prices have found a near-term bottom.”

Note: This blog is just an expression of the author’s opinion and cannot be deemed responsible for any losses incurred.