Gold has been caught in a harsh bear market. Prices of the commodity have declined from $1,930 (September of 2011) to just about $1,175 at present.
This is the when the US stock market almost increased twice as much. The yellow metal was not capable of holding $1,200 per ounce when rumors of a Troika-Greece debt bust captivated stock markets in the euro zone.
There are many factors that can trigger the decline of gold prices to $800 per ounce within the next two years. In other words, the USD will maintain its advantage over EUR, JPY and emerging market currencies. The surge of the dollar Index will definitely lead to the downfall of the yellow metal.
In India, imports can plummet in the biggest retail bullion marketplace if the government puts out a gold-related sovereign bond.
Consumers from India have stashed gold for years and reduce the country’s gold imports by approximately $5 billion. The nation’s current account shortfall will shrink and the rupee can increase to 56 versus the US dollar.
Gold was trading in within the range of $1,160 and $1,230 range during the last three months. Yet, the higher US dollar and rise of Chinese stock markets means it is likely gold prices will decline below $1,160.
Decreasing prices of crude oil prices also indicates production cost of the precious metal is currently below $1,200 per ounce.