Physical demand in the large consumer gold market of India has been weaker than expected because the newly elected government has not yet reduced gold import restrictions despite the trade balance having improved.
Hedge funds increased bets on lower gold prices after investors pulled a record $20.8 billion from bullion funds this year while BlackRock Inc., the world’s biggest money manager, said it’s still bullish.
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The price washout in precious metals intensified in the wake of the Fed's failure to please the markets with more stimulative action. The disappointment was palpable and, combined with the European debt debacle, resulted in fresh two-month lows for gold.
Precious metals dealings once again opened mixed in New York, with gold and silver still free from the effects of any profit-taking gravitational pull and with the noble metals exhibiting the opposite condition.
Gold and silver have extended their recovery and may be headed for the fourth day of gains due to the continuing European sovereign debt crisis, Chinese inflation and the risk that rising commodity prices bring inflation and stagflation.