Gold, the safe haven of people, is experiencing a bang fall spoiling the dreams of many investors as however the condition is, people are always fond of taking long positions for the gold. A very optimistic approach to say because they expect Gold is one such commodity which will definitely rise and give them the desired profit, but like the greatest source of energy to earth, sun, also has to set to welcome the night, safe haven also has to go through dark phases taking many risky investors to the same darkness. In recent days, gold is really giving a hard time to the investors- it is falling and falling with a bang! It has been falling for long and it seems as if the patience of the investors has been at the uppermost limit of the test standard.

Digging into the reasons why this happened, one of the most important and eligible reason is the rising dollar which is on the way to break its history of last 34 years. And what else, the most influencive economy upto now, United States of America, declaring that the monetary stimulus it has been providing may get reduced within few months.  Fed came up with a strategy that the central bank may soon implement policy to reduce the bond purchases, just a step to reduce the liquidity expansion it was providing to the market. Since the declaration, the Standard & Poor’s 500 Index has been continuously going up whereas the holding of gold-backed exchange-traded products has been sinking at a high speed.

Institutional investors have not been showing much interest on the gold investment in the scenario when the central bank in the USA has been lifting the stimulus from the economy. Experts believe that gold is going to have a hard time in the present firm-dollar environment. Gold futures for the June delivery has gone down by 1.6 percent as the gild is facing this slump as the highest since it had faced in March, 2009. Gold has toppled around 19 percent in this year due to which few of the investors have lost the faith on gold and started backing the stock market instruments. Fed has begun its asset purchases which has shown very positive impact on the overall labor market situation, therefore when the central bank will think about halting the current monetary measures, least hope of gold recovery can be expected. Besides that, the news of central banks in Greece, Cyprus, etc. trying to sell a part of their gold reserves is also accelerating the price fall.

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