Gold has bounced back after shortfall. Gold was going through the worst run regarding the weekly losses that were observed since 2004. Gold is usually a metal which has always been motivating investors to invest and make money with the safe trading behavior. As per the monetary policy declared, the interest rates had to be brought down and thus the interest rates were found much lower in this period. Moreover, the price of gold dropped to the cheapest in more than the four months therefore attracting many investors to opt to invest in gold anticipating no further losses in the gold prices. Following the gold, silver, platinum and palladium also moved up.

Spot gold has also rose around 0.3 percent from its lowest price since August 21. As soon as the US Federal Reserve indicated that the bond-buying program might end up soon, the prices of gold bounced back. The 14-day Relative Strength Index (RSI) comes to 41 after six weeks of losses observed. The reading of the RSI below 30 suggests that the prices may bounce back. Asset purchase program was launched in the USA with a motive to fuel the growth and reduce unemployment. Fed officials have yet been into discussions about when to end the Asset Purchase program or to continue as the unemployment rate still stands at 7.8 percent as per the data in December. Besides that, the central bank in the USA, last month, said that it will be happy enough to keep its benchmark interest rate closer to zero unless and until the unemployment remains above 6.5 percent and inflation remains above 2.5 percent.

As discussed earlier already, the economic expectations for the growth of the USA remains weaker which will merely give any chance for the rise in the interest rates but then this will definitely support the gold prices as there will not be much better alternative for the investment. Economists claim that the prices of gold may start getting lower as the economy will progress towards the second half of the fiscal year. Commodity experts claim that the bullions have rebounded as they reached the technical support which was along the lower Bollinger Band signaling the buy orders getting clustered close to it.

Because of the fragile economic condition, the currency is showing much volatility which may give a feeling that this price rise may not be sustainable enough. This rise in the price does not appear economically justified.

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