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Precious Metals may Lose Sheen

Rahul Oberoi/Money Today | Print Edition: February 2012

Gold and silver prices have fallen in the past months, but it might not be the best time to invest in these metals as they are expected to fall further.

"Gold is expected to largely trade with a negative bias as risk sentiments in the global markets remain choppy. However, silver prices are expected to be driven by a cautious tone as market sentiments remain mixed on account of uncertainty in the global economy," says Reena Walia, senior research analyst, international commodities and currencies, Angel Commodities.

Even analysts who expect prices of these metals to strengthen in the long term are not very optimistic about the near-term outlook.

"On account of the European crisis and dollar movement, prices of gold and silver can consolidate in the near term. However, for the long term, these metals have potential to move northward," says Lakshmi Iyer, head of products, Kotak Mutual Fund.

Why gold and silver are set to become costlier

Credit Suisse, a financial services firms, lowered its forecast for gold price to $1,755 per ounce (Rs 28,200 per 10g) from $1,850 per ounce (Rs 29,750 per 10g) in a 17 January 2012 report.

It also lowered the silver price forecast to $32.80 per ounce (Rs 52,700 per kg) from $33.70 (Rs 54,200 per kg) for 2012.

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