In the past few weeks, Gold has been experiencing a positive correlation to Treasury prices, which means Gold likely will follow the trend of U.S. bond prices. According to the Financial Times, an industry source reported in recent weeks that central banks have been buying Gold, with an estimated four metric tons of the metal being bought. The consumer demand seems to have helped boost Gold sales as well. According to Rohit Savant, an analyst with CPM Group in New York, “A lot of it has to do with bargain hunting.” Rohit said lower prices are enticing investors back to Gold.
With India‘s announcement late last week that taxes for Gold purchases will increase, many of that country’s jewelers have been on strike, which lead to a slump on gold demand this week. The jewelers’ fear that the shift to double customs duty on Gold will increase prices and weaken demand. This week, credit rating agency Moody’s announced that starting in April, India’s credit rating will be credit negative for its sovereign debt, based on its, “…dependence on corporate tax revenue and vulnerability to commodity prices and exchange rates.” Many investors are awaiting European data to see how the eurozone is faring after the Greek bailout deal. Yuichi Ikemizu, head of commodity trading, said, “A lot of people are on the sidelines at the moment. … We saw some bearish signs, but the market seems to be holding well. The upside at $1,800 is still looking quite heavy, and investors are waiting for a cue.” Continue reading