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Gold market review for year 2011 and Gold forecast for year 2012.


Since 2010, I was listening too many comments, some said Gold is in bubble and some said that it is going to touch $2000. What I think that Gold is always a place of safe haven. I don’t know whether many will be agree with me, but I think that Gold became more prominent in later half of 2011 when different central banks (like SNB) took steps to control their currencies. Obviously during whole year 2011, there was a trend toward shifting in safe havens from riskier assets. But this trend is somehow disturbed by USD, which has weakened gold price to some extent.

So, let see who is the winner in year 2011 –

ASSETs
30th Dec, 2011
12/31/2010-12/30/2011 (%)
12/31/2009-12/31/2010 (%)




GOLD (com)
1569.2
9.38
30.78
Dow
12217.56
5.53
10.34%
Dax
5848.78
-15.41
15.71%
Shanghai Com.
2199.42
-21.67
-13.98%
Sensex
15454.92
-24.64
17.44%
Russian Titan.
5733.6
-14.98
20.96%
Bovespa
56754.08
-18.11
1.04%
USD
80.178
1.54
-6.63%
EURO/USD
1.294
-3.24
13.91%
Crude (Nymex)
98.83
4.79
6.11
N. Gas (Nymex)
3.016
-41.04
-26.06


I don’t have the data of US Treasury and Bonds, so excluding those it is sure that GOLD is the winner during last two years. In LME the gain is more than 11%. If things go this way then it will also be the winner in coming years….




Gold market forecast for coming year 2012.

Gold may be better in worst in 2012 if financial recession continues, as it did in 2011. But it is sure that Gold can protect and also grow wealth if things do not improve.

 Right now Gold is creating lower high and lower low pattern, indeed if it creates that then it will be worst for that investor who has a big exposure in it. Gold broke a crucial level of 1600, now it will test a good support area of 1450-1500. If it breaks this range then next solid support is at 1350 and the worst case is ………..
Some indicators are reflecting that this level is a good spot to buy Gold. If in coming days USD drops then we may see a reversal of Gold in the upside. If anyway Gold goes up then it will get resistance around1600-1650. Though it is in initial stage but looks like it is following a pattern. If things don’t improve in coming days then there is a chance that Gold may again go up from 1350 level. All things depend on macro and coming future will clear that cloud.


Factors that can affect Gold.

The crisis in world economy is far from over, so lot of investors may take shelter in Gold in coming days.
If money supply continued to rise in 2012 then we may see its effect on Gold.
Global Central banks can diversified their foreign exchange reserves, which may hike Gold price.
Chinese factor is important for Gold valuation, as I read in many places that China may overtake India in this matter in coming future. On the other hand, some words came from China about diversification of their foreign exchange reserve. If financial recession continues as many are saying, then it is sure that China is going to buy more gold in coming days, just to diversify their $3.1tr foreign exchange reserve. I will be waiting to see how China handles this matter, because price of Gold is already in the higher side.
If Euro zone debt bubble burst then many currencies will be in trouble, especially the FIAT currency system will be in deep water, therefore Gold can be a good place to hide. If in future we consider that EURO will be in process of collapsing (thought mostly it will not happen). Then panic investors may shift their investment in Gold rather than any other currencies.

There is still confusion about the role of deflation in future but as most are predicting that coming days we will see more inflation, then that may be good for Gold. I am not sure yet about EU but it is sure that US is going to print more moneys in future and that will not be good for USD. Now if EU leaders follow the same thing (QE-2 for Europe, considering the cheaper loan as QE-1) then it will not be good for EURO too, therefore we may see a Golden era for GOLD.




NOTE :  Please see the disclaimer of this blog .

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