Gold prices are expected to rise this week owing to the downfall of euro zone. The past two weeks have produced bullish signs and at the moment, there are very modest but potential chances of any further increase in the international gold price. Presently, gold has held above $1,577 an ounce and seeing that investors expect the last week’s gold price plunge has overdone the debts. There is a strong belief that Greece could exit euro zone following the refusal of Germany’s stance over the euro zone bonds, who time after time appealing Greece to implement austerity measures to clear off debts. However, later in the week, Italian Prime Minister Mario Monti indicated that Greece would probably retain its place in the euro zone. Greece witnessed pro-bailout conservative’s parties leading the elections, which is another potential sign of Greece remaining in the euro zone.
Investors believe that the price of gold will increase once the association of gold price with the euro weakens. There is plenty of scope of increase in the prices of gold this year in the midst of high oil prices and euro zone jitters. The outlook seems to be dull and dry, but there is a great potential ahead in the gold market. Analysts expect that gold prices will recuperate in the coming days because the fundamental factor of the gold market is very much the same when the price of gold was high. The recent slump could be a take-off point for the increment in the international gold price. Certainly, gold prices would stay stronger in the present volatile situation.
60% of the gold demand in the world comes from two Asian countries, China and India. China has overtaken the first position from India in October this year regarding the highest gold demand country in the world. In India, the wedding season is on the brink of ending and the arrival of monsoon will witness a decline in the demand of the gold. However, Asian countries will look at the gold prices in their respectable currencies and due to the recent dollar value rise; it was believed that gold demand from these countries would shrink. The Indian currency experienced record fall in the recent time due to the downfall of dollar. When the value of the dollar falls, the gold price in Indian currency would take a sharp rise. Yet the high gold prices could not deterred Indians to buy gold thanks to the wedding season. The gold demand from India will witness record increase in November when Diwali (major Indian festival) overlaps with post-harvest wedding season providing fresh boost to the international gold price. There are probable chances that India will again retain first position for gold demand in the gold market.