A million dollar question doing the rounds lately is-where are the gold prices headed for? If you’re an ardent investor in the yellow metal, you are likely to make up your own assumptions and invest accordingly. But, keeping the speculation side away, gold has invariably been trapped around the $1600 an ounce since early May. But you may still wonder-why despite continued money supply and unfavorable US economic reports; gold has not been able to attain new highs. Still wondering why? Here’s the bitter truth: gold is currently priced for collapse and many analysts believe the yellow metal has topped out, thereby leading to the selling pressure we are a witness to.

Any investor would tell you that-being a gold investor is a tough business in today’s evolving market dynamics. The last thing any government or corrupt big bank wants is to have a bunch of people putting their savings into hard assets - and gold is one of the hardest of all. So we're constantly up against tides of propaganda saying that gold has no value.

After spending most of last year testing new nominal highs above $1800, investors have now perceived the current summer as the opportunity of the decade. Gold has shown its strength and retreated. While most investors will take that as a signal that the market has topped, some will take advantage of the general fear to add to their positions off the preceding highs.

Investors are well acquainted of such markets, and by making some reasonable inferences, some may have a good picture of how this could play out. Gold will continue testing the $1600 barrier until it surprises to the upside. This could be spurred by the announcement of QE3 (whenever it takes place), a calming of fears in Europe or any shock from the Treasury Market.

Right now though, an air of uncertainty envelopes the investors. Degrading news from Europe coupled with the slowdown in Asia has shaken the general market confidence. But experience teaches us that past performances don’t necessarily guarantee the future results.

A key to understanding such market dynamics is to understand that a price collapse is coming but not for gold! Instead, the market for US dollars and dollar-denominated debt is headed off a cliff, which will send the price of precious metals soaring. Suggestions are aplenty especially since numerous speculations are making the rounds in the markets. But my dear readers know better!

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