Despite the price of gold momentously expected to cross $1,800 line, amidst weak global growth projection, the price of ‘yellow metal’ have retreated by around 150 basis points this week. With U.S department of employment publishing an unemployment rate of 7.8 percent for the month of September against the expected rate of 8.2 percent, the price of gold seems to have been affected with rise in non-farm payroll numbers by 114K in U.S.

At the moment, considering the global economic performance and global market growth rate, major international organizations like World Bank and International Monetary Fund have already amended and reduced the global economic growth forecast to lower levels, up to 50 basis points down. Under such scenario, expectation of weak industrial data from Italy and France has fostered the gold to retreat and stem the ongoing momentum. According to an economists’ survey, in numbers, Italian and French industrial production could contract by 0.5 percent and 0.3 percent respectively for the month of August. Market analysts and investors are believed to have affected with lowering sentiments for gold in line with weak global performance and fragile economic growth.

With the festive season approaching in one of the major gold consuming nations, India, the physical demand for gold has increased to a certain level. Ignoring seasonal demand and price volatility, macroeconomic movements in the U.S and Europe will be the major driving factor for gold prices in the days ahead.

As U.S will be exercising the monetary measures to further downsize the rate of unemployment and improve investment environment in the country, ultimately enhancing economic indicators, with the anticipated fear of inflationary pressure in the U.S and subsequent decline in purchasing power of the currency, gold seems to be an attractive investment alternative for many investors desperate to hedge their financial positions against the upcoming inflation. Considering anticipated bullish gold market and optimistic outlook of Euro-zone amidst monetary stimulus in pipeline, the price of gold shall eventually rise above $1,800 mark with U.S trading off between ‘Inflation and Unemployment.’

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