Gold declined from the highest level in the past two month due to signs of weaker demand from the Asian countries including China and India. The technical indicators showed the declining trend of gold prices in China. The bullion for the Chinese market dropped as gold prices welcomed a free fall in the exchange. In China, the volume of gold i.e. 99.99% purity, were 7999 kilograms, the lowest price since April 10, according to data from the Shanghai Gold Exchange. The demand of gold seems to have declined in India due to higher taxes imposed in importing causing its demand to slump. In the same way, the other precious metals such as silver and platinum delivery also fail due to lesser demand.

US Federal Reserve is likely to begin to cut back its asset purchase program from September 2013 to $85 billion. The Fed news supports the improvement of the US economy and investors are following the Fed voice, rather than the economic conditions itself. The weekly unemployment claims last week had increased and the US New Homes Sales had also dropped by 13.4%.  Though the US economic condition is not satisfactory, the decreasing demand from the two prominent gold bullion consumers- India and China- has curtailed the gold prices.

 The president of USA, Barack Obama, holds Syria accountable for the moral obscenity of using weapons against its people and the Obama Administration has not made a decision on what actions to take causing the price of crude oil to rise due to unrest in Middle East, may disrupt the supply of crude oil which supports the price of gold to decline having inverse relationship of crude oil with gold.

It shows that the trend of gold is declining as we enter the last few days of August and people are more likely to demand and invest less in gold. People may shift to other sources of investment as precious metals are in a declining trend.

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