Lower inflation and modest improvement in the U.S. economic state of affairs increased the U.S.Dollar Index against six other major currencies while pushing down gold rates. However, the economic scenarios of other global economies remain in a sluggish state.
The continuance of liberal money policies of global central banks including the European central bank, Reserve Bank of Australia, Reserve Bank of India and others including Israel, Poland, Korea and Turkey indicate economic slowness in those countries.
The phrase “probable downsizing of U.S. bond purchase program before this summer” of John Williams, President of Reserve Bank of San Francisco boosted the green back and reduced the yellow metal's prices.
Also, the World gold Council revealed in its first quarter review of 2013 that physical gold buying in India and china increased enormously, and that central banks continuously purchased gold. The buying of gold by central banks, however, declined slightly against last year.
However, it added that a huge sell off by large exchange-traded funds dragged down precious-metal prices by 13% during the first quarter of 2013.
The All India Gems and Jewelry Trade Federation expects that gold metals’ requirements in India may increase its gold imports to 225 tons, rising 47% in the second quarter.
Federal Reserve Chairman Ben Bernanke’s is scheduled to address the U.S. Congress about the U.S. economy this Wednesday.
Today (May 20, 2013) as well, gold futures Jun 13 (GCM3) tumbled by -3.15(-0.23%) per troy ounce and traded at 1,361.55 till 12:32:41 GMT in COMEX.
My presumption is that unless there is negative news for the U.S. economy, gold is likely to remain in its bearish mood leading up to bernanke's remarks.
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Gold: The Week Ahead
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