Depending on the part of the world, gold bullion prices are currently seeing some of their highest in recent weeks as well as some of the lowest in recent months. The gold bullion market is in flux as trading, investing, and economies try to sort themselves out.
Euro Zone Crisis Causes Gold Bullion Prices to Drop
Similar to what happened to the American financial crisis in 2008, the current Euro zone crisis has caused gold bullion prices to drop this week in the West. Gold bullion prices dropped 2.40 percent this past Thursday; the fourth consecutive down day, after it was warned that American banks are dangerously exposed to contagion from the spreading Euro zone crisis. As of Monday, gold was trading at $1,675.50, down $49.60 per ounce. The entire precious metal, commodities, energy and equity markets are reacting to a worsening Euro zone crisis.
Despite the flux in the west, gold bullion prices are expected to reach their September high by the end of the year. Trading volumes in the gold bullion market are expected to continue to increase in the coming weeks as well.
China Getting Its Hands on the Gold Bullion Market
China and other developing nations have been encouraging citizens to buy and to hold physical gold, in forms ranging from jewelry and coins to bullion bars. China’s aggressive promotion has pushed Chinese consumer demand for gold up 25 percent overall this year – much higher than the seven percent global average. This has boosted gold bullion prices and the gold bullion market in the region, as China pushes gold in order to build its financial reserves in assets stronger than the U.S. dollar, euro, and other weakening currencies. It also increases China’s role in the the gold bullion market and the precious metals market.
This push from in the gold bullion market is also interesting since as late as 2002, it was against the law for Chinese citizen to own gold. China wants to be a real game changer to the gold bullion market, with plans to hold a Pan Asia Gold Exchange in 2o12 and to introduce gold vending machines through the country. Once both of those things happen, gold bullion prices will skyrocket as demand will skyrocket in the country and the region.
Gold Bullion Prices at Risk Due to Supercommittee
Yesterday, gold bullion prices fell for their biggest drop in a two-month period due to heavy losses in the equity markets, which prompted traders to book their profits before the end of the year. Equity markets and traders are fearful of further decreases to the U.S credit rating because of the supercommittee‘s failure to reach a deal. The demand in the gold bullion market is also expected to decrease in the U.S as the country’s debt continues to grow and investment opportunities are at risk for drying up.
Gold bullion prices are in major limbo right now as global economies sit on unstable grounds and more entities are trying to jump into the gold bullion market. As a whole, the demand for gold and gold bullion prices are projected to hold up and to do better than at the start of 2011.