5 reasons why gold should be sold on every rally

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Each time gold shows encouraging signs of a rally, it comes down again. This year, gold is set to snap a continuous 12-year rally and could end lower. Here are 5 reasons why gold should be sold each time its price rises.

95% crash in gold imports

India's gold imports crashed 95% in August as the government introduced a series of measures to curb gold imports, as the rupee hit a historic low of 68.81 to the dollar. High gold consumption, puts pressure on the rupee, due to large dollar outflow to pay for gold imports.

As demand in India wanes, gold prices are slated to fall further.

Sept 19 - a big day for gold

Analysts are betting big on the Federal Reserve tapering its quantitative easing programme, when its open committee meet ends on Sept 19.

The Federal Reserve has been purchasing assets worth $85 billion each month, adding to liquidity in the global markets, which has found its way into gold.

A QE tapering off would certainly mean gold prices are headed lower.

Bond yields hit 3%

US benchmark bond yields hit a two-year high of nearly 3 percent recently, which is not good news for gold and equities.

Rising bond yields would push investors to invest in bonds and sell gold.

Rupee gains 7% from historic lows

The rupee is gaining ground and every time the rupee gains, import of gold becomes cheaper. The rupee has already rallied 7% this month and Indian Gold prices have dropped near the 30,000 mark. 

Charts look weak

International gold which has lost 20% this year, is weak on the charts say technical analysts. In fact, they say the metal could fall further.

Indian gold tracks international movement and we derive our prices from international prices.

Read more about: gold, fed reserve, qe
Story first published: Saturday, September 14, 2013, 8:19 [IST]
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