The shining GOLD is no more shining high. Last week it had one the biggest weekly fall on account of a strengthening US dollar, which is gaining strength because of a crisis in EURO zone.
This I believe is expected to continue further, because the four EU countries( Portugal, Spain, Greece and Italy) which are facing the maximum chances of a debt crisis holds most of there reserves in the form of Gold. Thus, prompted by the current crisis they could start liquidating there Gold reserves, which will further bring down the prices of Gold.
As Per the latest IMF data, as on 31st December 2009
- Portugal Holds around 75% of its reserves in Gold
- Greece around 70% of its reserves
- Italy around 60% and
- Spain around 40%
Thus, I strongly believe that the way this current crisis is unfolding, these countries will sell their gold reserves to avoid the chances of a Sovereign Default.
Hence, avoid buying GOLD on dips and if you are a trader then can go short on GOLD.
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