Gold could climb back to $1500, Silver to $26 as Fed taper threat goes
US Gold futures for December delivery shot up by $60 to $1360 an ounce while Silver futures for December delivery shot up to $23.015 levels. According to Sreekumar Raghavan, Chief Strategest at Commodity Online Group, who had earlier forecasted $1500 gold by December 2013, precious metals is at the beginning of the strong demand cycle from September to January and market had taken a beating on speculation that Fed may announce tapering measures
US Gold futures and spot gold now stand a better chance to reach $1500 per ounce while silver prices could rise to $26 by year end as US Federal Reserve has indicated that it is not implementing tapering of stimulus as expected by September.
US Gold futures for December delivery shot up by $60 to $1360 an ounce while Silver futures for December delivery shot up to $23.015 levels. According to Sreekumar Raghavan, Chief Strategest at Commodity Online Group (India's leading commodity-equity trading services group), who had earlier forecasted $1500 gold by December 2013, precious metals is at the beginning of the strong demand cycle from September to January and market had taken a beating on speculation that Fed may announce tapering measures.
"This could eventually take gold near to $1500 levels aided by a weaker dollar and safe haven buying as continued stimulus measures will be inflationary," Sreekumar Raghavan said. Silver is backed by sufficient industrial demand and hence could move upwards of $26, he added.
Fed surprised everyone on Wednesday by postponing tapering measures and revising downwards the outlook on US economy from 2.3% GDP growth to 2% and this caused US dollar to fall to a seven month low against major currencies. Gold soared 4%.
Reuters quoting some economists said that winddown of stimulus measures may not start until present Fed Chairman Ben Bernanke's term ends in January. And it could be left to his successor to try out such measures. Fed Vice Chair Janet Yellen is the front runner for the job.
It may be recalled that a few days ago HSBC Global Research had revised its gold outlook for 2013 from $1396 per ounce to $1446/Oz in view of strong Asian demand. China demnad for gold jewelry, coins and bars had shot up recently while India is entering a seasonally strong demand period amidst a steep hike in customs duty on gold and silver to 10% and jewelry duty from 10 to 15%.
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