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The factors that determine the price of gold as it looks to be more volatileWednesday, 21 March 2012
Gold prices have not kept up on a flying start when the stock market opened this year. According to analysts, the price of gold is in an "ambivalent position".
In the second half of 2011 gold price ran from about $1,500 per ounce up to up to level $1,921 per ounce. Since then it has fallen back to current the levels around $ 1,650.
This past month seen the price of gold backed down nearly 5 percent increase since year-end and now add up to "only" 5.5 percent.
"In recent months the stocks and shares have actually outperformed commodities such as gold and there is a clear sign that such optimism dominates, "said Filip Petersson, commodity analyst at SEB.
As brighter noises from the U.S. and reduced concerns over Europe's debt crisis continues, investors are moving their money to other assets. But according to SEB analysts, merchants are groping for something to stick.
There is not really much focus on gold market - like many other markets there see to be a search for something to focus on according to Filip Petersson.
SEB has lowered its expectations for the price of gold. But Sweden’s central banks' generous monetary policy means that the bank in 2012 still trails an average on gold price of $ 1,800, but with a possible peak of the previous price record of $ 1,921.
Then according to SEB, the price of gold will fall as economic recovery gathers pace.
"We believe there is still a pretty good support at this level, "said Filip Petersson.
Filip Petersson points out the real interest rate as the single most important factor. Increases in interest rates while inflation stays on the abyss would be negative for gold prices.
"This is probably the gold rally we've seen over the past decade. This would also mean that production responds further to the high prices, that risks becoming even worse, "said Filip Petersson, referring to the interest for the extraction of gold which has risen with the price rise.
By Scancomark.se Team
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