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Will the gold price just trend lower this year?

by , 22 April 2014

After staging a slight comeback earlier this year, the price of bullion is struggling. Rising tensions in Ukraine initially helped the gold price, but a stronger dollar is putting the pressure on its price. Not only that, a survey suggests the price of gold is set to fall further as demand for the yellow metal wanes. Let's take a closer look at what's going on with gold.

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The gold price steadies after a heavy fall

After falling in value “for three straight days,” the price of gold is steadier, says IOL. The weaker dollar helped the metal. But with “continued outflows from physical gold funds” pressure is mounting on the gold price.

Yesterday, the gold price dipped to its “lowest since early April at $1,281.40 an ounce,” reports MoneyWeb. This follows the gold price hitting $1,330 the previous week as investors worried about the goings-on in Ukraine.

Edward Meir, an analyst at INTL FCStone, says that “the technical picture in gold looks very sloppy (in the short-term),” notes Fin24. And this scenario could worsen if gold breaks through the “key support between $1,277 and $1,280”.

But Mr Meir says the tensions in Ukraine “could still benefit” the price of gold, adds Fin24. Only time will tell what develops in the region.

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The factors pushing gold lower

A gold survey released by Thomson Reuters paints a rather grim look for gold this year, reports BDLive. The survey predicts gold falling to “$1,100 an ounce in the middle of this year”.

Thomson Reuters says the main pressures on the gold price come from falling demand from China and “heavy sales from exchange traded funds (ETFs),” adds BDLive.

Yesterday, the largest gold-backed ETF, SPDR Gold Trust, revealed “another drop in holdings,” says Fin24. Its gold holdings dropped “3 tonnes to 792.14”.

So the gold price is under pressure. There are many factors at play. But at the moment, the price of gold is struggling to make any headway. The gold price could just continue to fall.

Will the gold price just trend lower this year?
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