Is Gold Price Set for Crash Below $1,000?

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After the historic
boom, is gold price climbing down to $1,000 per ounce, to confirm
to the controversial prediction that noted economist Nouriel Roubini
made some weeks back? It looks so as gold is going bearish, in the
weight of economic nervousness coming from the two important countries
that matter – United States and China.

Now, as gold
sank to a three-week low on Friday across the global markets and
commodity bourses, some bullion analysts warned that gold price
could plunge below $1,000 per ounce if the talks on property bubbles
from China and financial risk taking concerns in the US are going
to intensify.

“Gold
is on a bearish mood these days after the precious metal’s
spectacular ascent to the record high of $1,227 per ounce in November
last year. Gold price may not boom above $1,227 this year, if commodities
get into a slump in 2010. A crash in gold price below $1,000 per
ounce can not be ruled out,” said Mark Robinson, a bullion
analyst based in Dubai.

According to
Robinson, the main problem with gold is that “its price has
been over-hyped by some bullion analysts and forecasters.”
“It is funny to see so many gold predictions going around in
the search engines on the Internet. Gold price is being predicted
from $1,000 per ounce up to a whopping $5,000 and even $10,000 by
analysts and investors ranging from Jim Rogers, Marc Faber and Nouriel
Roubini to research assistants in small broking firms,” Robinson
told Commodity Online.

While Robinson
agrees that gold is the most valuable asset among commodities and
the yellow metal is arguable the best investment asset class in
the world, he points out: “But there is so much hype going
on in the bullion market on gold price. The hype lacks basic fundamentals
like gold mine supply, demand and possible emergence of other commodities
like platinum, palladium and silver as equality challenging investments
like gold.”

But, all said
and done, what are the real reasons that are prompting investors
and bullion traders to press the panic button on gold price?

Read
the rest of the article

January
23, 2010

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