Gold hits 5 Year Low, May Touch $900 in International Market

The much anticipated fall in the Yellow metal has finally occurred as Gold touched Rs 24904 per 10 gms at MCS, its lowest in the last 5 years. Though everybody was waiting for this kind of fall considering the offloading of gold in the Chinese market and better than expected recovery of US market during last 1 year, Indian investors are not amused by this fall yet. If we believe on the international cues then the current level of $1080 per ounce is just the start of this kind of fall and the prices may touch $900/ounce soon.

Experts believe that owing to decent recovery of US market, the rate hike by the Federal Reserve is inevitable and if it happens now, it will certainly hurt the Yellow metal by a big way.  Considering this rating firm India Ratings and Research has maintained a negative outlook on domestic gold prices for FY16. “In the event of a US rate hike, global gold prices could drop and range between USD900/oz to USD1,050/oz,” agency reported recently. What does it means for India? If it happens then Indian price of gold may plunge to as low as Rs.20500/10gms and unsurprisingly Indian buyers are also anticipating this. That being the reason despite a drastic fall during last couple of days, no fresh buying has started in a country that has a great fascination about gold and consumes around 900 tons of gold every year.

At the same time there may be some glitch into this downward journey. If Eurozone and Japan continue their stimulus and US lingers on in its rake hike then gold can take a U-turn and may inch northward in the short run. It is important to note that central banks of various countries have started accumulating gold, though it is not in great quantum. North Indian bullion Merchant Association Coordinator Kailash Chandra says; “Considering this Gold may have a cushion at around $900 in the international market and looking at the uncertainty that is present at the global platform, the price of gold may strength gain during Diwali.” Having that in mind, it seems that gold may plunge to a new low in the coming weeks and for  investors, this promises to be a good buying opportunity.