Bullion: Turbulence in 2011 and the outlook for 2012

2011 had been a wild ride for gold, with the price surge through the first three quarters of the year and then the collapse in Q4. The sell-off had confounded many analysts and investors who thought gold would serve as the ultimate safe haven in times of uncertainty. In fact, the opposite had turned out to be the case with the US Dollar becoming the go-to asset in times of safety.

Gold and silver prices changed direction very sharply throughout 2011: despite the sharp gains of gold and silver prices up until September, precious metals prices changed direction during the last quarter of the year and plummeted in a very short period of time; from this drop precious metals didn’t recover throughout the remainder of the year.

Spot gold prices soared to a record above $1,900 an ounce in early September, dipped below $1,600 late in the month, rebounded strongly, and then fell below $1,600 again last week. That’s a 16 percent decline in three months, although the shiny metal is still up for the long term.

Silver had a very volatile year so far. They peaked at $49.81/oz after rallying 88% from the January low. Since then Prices have dropped to $26.06/oz, but have now recovered

Factors that resulted in this downfall were; the FMOC’s decision not to add another stimulus plan (QE3) during the second half of the year, CME’s decision to raise margin on gold and silver, The European Debt Crisis which lead to liquidity problems for banks and traders, strengthening of the U.S Dollar, and shift in market sentiments from considering gold a safe haven to a risky asset.

Year-end selling by hedge funds and tight liquidity in European interbank money markets have also contributed to recent price falls.

Concerns about the euro debt crisis have sent investors scrambling to buy dollars as a haven from risk, rather than gold, which has caused the dollar price of gold to fall.

The market seemed bearish for both gold and silver. The world economy is recovering at a very slow pace and the liquidity crisis is getting severe.

A slow recovery of U.S. Economy had created a bearish outlook for gold and silver, where both the precious metals looked low. A target of Gold at 24k-25k and silver at 45k-48k was expected in early 2012

However, the predicted targets were reached in the end of 2011 itself and now since this correction has come about, people who purchased bullions at this point will not regret their decision.

From here on, a bullish outlook is predicted for bullions.

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Tags: Gold analysis, gold forecast, Gold future prices, Gold futures, Gold investment, Gold news, Gold price, gold price 2012, gold price forecast, Gold prices, price of gold, Spot gold, Spot gold price

Posted by admin on Jan 17 2012. Filed under Gold predictions. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry