In the ambiguous world of today, a common question doing the rounds lately is- where is gold headed next? It must be evident to all, at the beginning of this attempt to unravel the mystery, that the prices of gold has fallen like the protagonist of a Greek play, unexpectedly, leaving the laymen bewildered and stupefied. The reasons for this stupendous nosedive towards the south has been scrutinized and analyzed like an architect exploring every angle for a new masterpiece. Yet, this article will assist in churning out a new masterpiece with the predictions for the future vis-à-vis of an ardent weatherman-with safety as a gentle prerogative!

Commodities have taken a heavy pounding in the preceding weeks, with fears of an impending slowdown in China, as echoed in its latest announcements and indicators. But despite the gloomy days of the commodities, one metal could actually benefit from a supposed hard landing in the world’s second largest economy- Gold. The recent fall in the country’s economic growth could trigger a buying spree in the safe haven as the Chinese investors could shift their interest towards the metal as an alternative form of investment. A slowdown in China could result in the change in the pattern of gold purchases leading the Chinese to purchase the precious metal in prevailing times rather than purchasing it largely during festivals only thereby adding gold more consistently to their portfolios. China has already been hailed as the world’s second largest consumer of gold after India and the economical outlook from our neighbors will definitely impact the prices of gold in the ensuing days.

The World Gold Council (WGC), in its baffling analysis, concluded that the grand exodus out of gold, mainly due to the heavy exchange traded fund (ETF) selling, may be nearing the armageddon, with predictions of bullish markets picking up in the latter half of 2013. Driven by a bolstering prospects for the US economy coupled with the expectations for a tighter monetary policy in USA, the investors in gold ETFs have already sold around 650 metric tons of gold so far this year. This is equivalent to the amount that rushed into the markets eight months after the collapse of the infamous Lehman Brothers when investors were searching for safe haven. Déjà vu once again?

A persisting increase in gold demand out of the world’s second largest economy intertwined with a decline in production, will put the markets back in balance, leaving gold to re-establish its status quo of being coined the most watched commodity in the markets once again.