Tuesday, December 25, 2012

Analysis forecast Gold prices in india 2013

Stock market today - Analysis forecast Gold prices in india 2013  : Gold slipped in thin trade on Wednesday as uncertainty over whether the United States would be able to avoid a fiscal crisis kept investors at bay, but lower prices spurred buying from jewellers. President Barack Obama is likely to leave his vacation in Hawaii to return to Washington as early as Wednesday to address the unfinished "fiscal cliff" negotiations with Congress.

Gold futures prices fell by 0.40 per cent to to Rs 30,732 per 10 gm as speculators reduced their positions, taking weak cues from the global market. At the Multi Commodity Exchange, gold prices for delivery in February fell by Rs 122, or 0.40 per cent, to Rs 30,732 per 10 gm in a business turnover of 1,569 lots. Similarly, the metal prices for delivery in far-month April fell by Rs 115, or 0.37 per cent, to Rs 31,152 per 10 gm in 58 lots.

Gold is mostly considered as a hedge or a long term investment rather than means of speculation for most of the investors. Gold price forecasts will never be completely accurate, but we collected some information on the key drivers influencing the gold price forecasts for 2013, to give an idea.

Review of gold in 2012
2012 opened with a 'green' for Gold. The gold price started into the year 2012 at $1,530 per ounce. Over the full year 2011 the price of gold had increased by more than 13% despite the two dips in September and November/ December. This made 2011 the tenth consecutive year in which the gold price increased.

By November, the gold price had further increased to roughly $1,740, i.e. by more than 13% from the beginning of 2012. Throughout the year, the major factors that played an important role on the precious markets are as follows:

>> In 2010, central banks have changed their status from net sellers to net buyers of gold, driven by a decrease of sales from developed countries and an increase in buying activity from developing countries. Given the low percentage of central bank’s asset allocation into gold in emerging countries like China (2% versus about 70% in countries like the United States, Germany and France), there is a high probability that the central banks will continue to be a net buyer of gold in 2013 and even beyond 2013.

>> Besides jewellery, the demand from the investment sector accounts for more than 50% of total demand. Amidst the money and debt creation by major economies and following the financial crisis, which started in 2007, the demand for gold as an investment reached record highs in 2011. The demand has rose exponentially in the from gold securities like gold ETF and physical gold in the form of bars and coins and in the latter part of the year it has increased in the form of professionally vaulted gold. This indicates that safety is a major concern for gold investors, who usually view physical gold or vaulted gold as more safe than so called ‘paper gold’

>> For India, the government left no stone unturned so as to curb the gGold imports and in turn reduce their trade imbalance. Increase in the import duty on gold, change in lending behaviour of Indian banks for loans against gold etc has affected the demand of gold in India. Just for understanding, government had increased duty in December, 2011 on gold and silver. An additional 2% increase of import duty on gold in March, 2012 has impacted, not only for bullion industry but also for the common man.

>> Through the middle of the year many investors lost faith in gold and no longer believed hat gold is a safe haven asset. Many even believed that gold was in a bubble stage. Investors shifted their attention to other assets like dollar. But as we have seen in the past, gold started gaining importance once again.

>> The Greek Elections held in June reflected mixed sentiments for the precious metals market because everyone was waiting for the FOMC meet that was held after the elections.

Concluding the meet, in a bid to reduce unemployment and protect the economy, the Fed decided to extend its Operation twist till the year end with a sum of US$267.The Launch of QE3 had pushed gold prices to new highs of the year. India too witnessed gold peaking to its life-time high of 32,650 in the physical markets through depreciation of rupee and rise in international prices.

Outlook Gold prices 2013:
Globally 2013 will be a better year than 2012. There are positive sentiments in the market as far as economic growth is concerned. GDP growth will also be high. A better economy will bring a rise in demand worldwide and thus production will increase. In this case demand for silver will also rise, given its wide use in various industrial applications. The range for silver in the Indian markets for 2013. Will be between Rs 52,000 and Rs 80,000 a kg.

As far as gold is concerned, it will be moving in the range of Rs 29,500(per 10gm) on the lower side to Rs 35,000 on the upper side (a range of Rs 31,000 to Rs 35,000 is where we expect gold to trade). Gold tends to perform positively in times of economic uncertainties as well as in acute crises. Unfortunately, the global financial problems are not yet sorted out. I still feel there are several more years of uncertainty and painful deleveraging, which could end only when we are approaching the next decade. 

Moreover even if gold prices drop in the international market, Indian prices do not fall that significantly. Due to the rupee depreciation, the reduced international price does not completely impact the Indian price.

Moreover, in 2012 we saw a low volatility ratio and the fluctuations in the market were not that volatile. Whereas in 2013 I expect 50 per cent higher volatility compared to 2012. Geopolitical risks, e.g. in relation to Iran, will support this position of gold as a ‘safe haven’ further. Overall, the markets will be positive for precious metals.
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