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CU: Gold marks end of summer doldrums
 
Forecasters believe that gold has bottomed out and now will slowly climb higher. The index has gained 21% in the past year, 8% since June and 1.3% in the past week! It ended the week with a 6th straight weekly gain, its longest winning streak since February/March. Moreover, the fact that gold stocks are outperforming gold is a bullish indicator for gold itself.

Gold prices surprisingly jumped despite the fact that India’s import duty has remained the same, 10% of its fiscal budget. Furthermore, the divergence between copper and crude oil relative to gold has widened. This spike is indicative of a double peak characteristic that preceded the Great Recession and the Arab Spring of 2011. Thus exhibiting a promising outlook for the future price of gold.

Gold is used as an alternative to currency; it’s viewed as a safer store of value. Thus, with the current global economic and political uncertainty investors are returning to gold. Gold prices rose soon after the news of the financial problems at Banco Espirito Santo as it triggered suspicions of a possible contagion into Europe. Further, the conflicts in Ukraine/Russia and in the Middle-East namely Iraq/Syria, Hamas/Israel continue to support the rising price of gold. The financial and geopolitical uncertainty has caused gold to be the most actively traded contract, since August 2011.

Gold remains to be attractive as interest rates remain low; the Federal Reserve is moving towards a tighter monetary policy and is discussing alternatives to interest rate rises. Hence, supporting the price of gold. However, the optimistic outlook for US growth is cause for concern. Investors should monitor Chief Janet Yellen’s congress testimony and the monetary policy report to congress, released between 15 and 16th July, as it will drastically influence gold prices.

Nonetheless, gold prices continue to rise. If you decide to take advantage of trading gold ensure you don’t buy too much and consider a gold exchange traded fund/holding physical gold/buying gold miners. Now who’s hungry for gold?

About Shoaib Abedi

Shoaib Abedi is the Director and co-founder of ICM Capital; a UK based company licensed and regulated by the Financial Conduct Authority (FCA) in London with offices around the world. Shoaib was instrumental in establishing ICM Capital and subsequently headed the business as well as forming the company’s infrastructure from day one. He is widely recognised for his role in shaping the firm’s corporate ethics and for his leadership skills.

Shoaib who speaks five languages fluently and has a BA in Finance & Management started his career in Forex and CFD trading 10 years ago. From the day he placed his first trade over a decade ago regulation and licensing were the most important factors for him. Throughout his trading career he has gained expert knowledge of foreign exchange and understanding of what affects the financial markets. He is respected in the online trading industry and often quoted in well-known media outlets where he gives insights on what economic factors affect the markets globally.

Throughout his career Shoaib has embraced the principals of compliance, integrity and transparency in trading. Whilst being the Director and board member of a UK- regulated Firm, Shoaib has expanded the company throughout Europe, the Middle East, Africa and Asia and has formed a work ethic of trust and transparency that flows throughout the whole corporation. He has also gained the reputation of implementing state-of-the-art technological improvements in online trading and is constantly refining features to be used on a world-class trading platform.
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