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Top 4 reasons for falling gold prices in USA

gold-trading-online1After numerous eras of attainments,ultimately Gold prices in USA are facing its unwavering descending stage.The gloss of gold market is faded.History reveals a 40% upsurge in gold price in 10 years till 2013.But the decline in prices from $2,000 in 2013 to $1204 in 2015 is shocking and as well as alarming.Forecasts says,the glitz of gold would move ahead to crumble in the near future.

Here are the top five reasons why gold prices in USA are on decline.

1.Strengthening of Dollar

An improvement in American economy was recorded in the year 2014 by the PMI,which calculates the business state of country.The trend of upsurge in dollar value is directly linked to the enhancement in economic activity.And a noticeable increase in dollar has been cited in previous year ,which consequently ascends the interest rates as well.And here comes the stage when we see a drop in price of gold,which is dependable on the above mentioned factors.

2. Efefct of substitute currency on Gold prices in USA

Another major factor behind the price-drop of gold is Bitcoin. Bitcoin is the virtual currency created for use in online transactions.Their notable elevation in monetary worth has been a major force behind the decline of the gold prices.After the decline in Bitcoin value,beholders of the Bitcoin.The investors,who probably are gold investors as well,would be left with no other option than to sell their assets,which led a remarkable fall in the gold prices in USA.

3. Economic policies of Japan

A general trend,as the value of currency decreases,masses rushes to sell out their valuable asset gold. The economic policy of Japan is also a driving factor of decrease in gold price.Steps taken by the Japan government,to decrease the value of Yen,urged the masses to sell their asset,as mentioned and thereby lowering the gold prices.So this means that policies of the Japanese government plays an important role in rise and fall of gold prices.

4.Involvement of European Central Bank.

The European Central Bank shows interest towards the slow prosperity in Euro zone and and threats towards the region weak monetary improvement by declared two bond purchase programs and reduced interest rates.Whereas the ECB’s conduct influence might be assorted.The ECB’s conduct will abate the Euro and bolster the Dollar. This consequently make dollar based gold contract more costly for the purchasers using other currencies than dollar.Thus the demand for gold decreases.

 

Future outlook of gold prices in 2015.
A strong dollar is causing compression on the prices of gold. The appeal for dollar based assets like gold is abated when the dollar becomes strong. Main reason behind this is the hike in price of the metal for possessors of other currencies, thus declining its value. The future outlook of gold continues to be unchanged,as it is expected by the economists and investors that american economy and US dollar will strengthen more in the near future.But some analysts are expecting that gold prices may rise in the year 2016,as demand for gold will rise in Asian economies.So gold market analysts are advising the long term investors to  hold their positions in the gold market so that they can easily reap benefits from the rising gold prices in USA in the future.

 

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About Emaad Qureshi