The gold prices are going north, as European central banks continue to buy gold and not sell gold as they have done in the past. The increase in gold prices is puzzling as funds continue to sell gold to offset the risk. While an under performing US economy cannot bring back confidence in the markets nor the demand for gold. Gold prices normally plunge with uncertainties; the worries over the sovereign debt in Greece have pushed the price of crude and gold down.
During the first four months of 2011, Soros Fund Management is said to have shed almost 99% of its holding in the world’s biggest precious metal fund, the SPDR Gold Trust -sending out negative signals to gold buyers who went on to sell gold
Market analysts are of the opinion that gold prices are going through correction. Investors continued to sell gold resulting in a price drop earlier, when the US dollar appreciated against the euro when Greece’s credit ratings where downgraded.
However most experts agree that the correction phase could be short lived. There are many factors such as inflation, the Middle East crisis, the likelihood of US dollar weakening and the worries over the sovereign-debt level in the US reaching the legal limit which would encourage investors to buy gold.
If you want to buy gold, you have to keep a close watch on the how the market act and when these corrections would end. Market analysts say that it would be wise to buy gold when the gold price in the price band between $1,460 an ounce and $1,440 an ounce.
Though the gold bought by the European central banks has been only €6 million, much of it as coins; the fact that they are buying gold is itself news. Especially since, the same countries have sold 1,937 tons of gold over the last 12 years.