With FED intention to taper QE from the current USD 85 bil to USD 75 Bil per month in bond purchasing, gold trading price is expected to go lower as USD gained strength in a few weeks to go. Overall, it is a good time to purchase the yellow precious metal!

FED is maintaining liquidity in the US market by introducing QE 1, 2 and 3 as to aid US economy after US sub-primed mortgage crisis in 2008. However, by pumping e-money into the market via bond purchasing over the years, has weaken the US dollar against foreign currency, thus causing US government to pay more to its foreign creditors in the long run, increasing the risk of defaulting, in return causing US Treasury bond to loose its AAA credit rating from Standard & Poor (S&P) in 2011.

With the weakening of US dollar against foreign currency, commodities that are traded world wide in USD also experiencing artificial increment in price and thus seeing gold price appreciated drastically after the introduction of QE in late 2008.

With the tapering of QE, the US dollar is anticipated to gain strength and majority institutional investors will take advantage of this moment to make good gain from currency exchange alone thus leaving the Asia equity market for now, returning to the US market.

In the long run, when the US economy is back on their feet, they will continue to be one of the world's largest consumers, continuing to import goods frm other parts of the world especially China, thus spurring global economy growth.

I wonder whether physical gold price will go below RM 100/g?

Why is that so brother Wil? I would appreciate it if you are able to elaborate a little further.

Yes! With the tapering of QE in response to the improvement of US economy as well as the unemployment rate, USD regains strength as time developed. Investor's confidence towards the world reserve currency also improved vastly, driving lower demands for the yellow precious metal.

Nevertheless, diversification is a must as the old saying goes, do not put all your eggs in one basket. Gold is still one of the many lucrative investment vehicles of all time. With India, the 2nd largest populated country, and the largest gold consuming country which represents 30% of the global demands, gold will still maintains it demands globally and continues to be one of the greatest assets in the future!

This post has been edited by felixwang: Feb 8 2014, 12:31 PM