The document discusses factors impacting gold prices globally. It notes that expected interest rate hikes in the US, a slowing Chinese economy, a strengthening US dollar, low global inflation, and central banks purchasing less gold are putting downward pressure on gold prices. Gold is also losing favor as an investment as higher returns can be found elsewhere with rising borrowing costs. The relationship between the US dollar and commodity prices like gold is also examined.

1. POOJA GAWANDE – PG02
SNEHA DALVI – PG06
12-09-2015
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2.  LIKELY RATE HIKE IN US
 LOWER FROM DEMAND CHINA
 STRENGTHENING DOLLAR
 LOW GLOBAL INFLATION
 NO DIVIDEND
 CENTRAL BANKS BUYING LESS
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3.  US federal reserve raise interest rates on the back of an improving
American economy.
 Gold is a store of wealth for investors.
 With borrowing costs set to rise, commodities, such as gold, are
losing favour with investors, as higher returns can start to be
generated elsewhere.
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4.  Chinese had overtaken India as the largest consumer of gold.
 China imported 36% more gold both on a year-on-year and
month-on-month basis, investors are parking their money in
safe havens.
 Because of Economic slowdown in china people are trading
less in Gold Market.
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5.  The value of the US dollar typically follows an inverse
relationship with commodities.
 When the dollar strengthens against other major currencies,
the prices of commodities - such as gold - typically drop.
 When the dollar weakens, commodities generally
move higher.
 The main reason for this is because most commodities are
freely traded in international markets and prices are quoted
in US dollars.
 Foreign buyers will purchase commodities with dollars, so,
when the value of the dollar drops, they will have more
buying power, and demand increases and vice versa.
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6.  Gold is a hedge against inflation.
 The easy-money policy after the 2008 crisis led to fears of
high inflation.
 Inflation stayed low in the US, Japan and Europe.
 Investors are now reluctant to buy gold.
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7.  Gold does not earn any interest or dividend.
 If US raises rates, interest income from US bonds will also
rise.
 So investors are preparing to move away from gold to bonds.
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8.  The largest gold buyers, central banks, especially from
emerging countries, are buying less.
 They are pilling up dollars to counter outflows once the US
raises rates.
 India's forex reserves in gold stands at 5%, down from 7% 5
years ago.
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10.  Gold is priced in dollars, so if the American currency goes up,
investors mark down the yellow metal accordingly.
 The Yuan devaluation will affect India's exports not only to
China but to other countries also with increasing
competitiveness of Chinese exports.
 The nuclear deal with Iran reduces the risk of war (which
tends to boost gold). It also raises the chances of a broader
agreement on other Middle East issues such as Syria.
 The scale on which central banks are creating money out of
thin air will eventually doom the whole edifice of
international finance.
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11. 1. As its globalisation era every economy has its impact
indirectly on the worlds economy.
2. Due to the current Greek Crisis as Chinese economic
slowdown had affected the overall international markets
which also include commodities markets ,which has shown
adverse effect on gold as its main commodity of the world
as all countries of the world has there reserve especially
gold and so the overall prices of gold are falling.
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12.  As future prospects we feel that taking whole scenario in
consideration the Chinese economy Doesn’t seem to cope up
rapidly in near future and so it feels that the gold prices
would degrade more in long term.
 The Current Price of Gold have gone up to Rs.26,013.
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13.  Current Gold Prices Rs.26773 fall today.
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