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Is it the time for Bear Market of Gold?

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Golden Bear Market

Well it is needless to say that the bullion market has made individual rich. A safe investment with maximum return is all how we can characterize Gold. But the trend is unlikely to continue in future and the decade long rising trend of Gold is likely to rebound. After gearing up for more than a decade, we see a start of a bear market cycle in Gold in 2013-14. Consumer demand which has been driving the price of gold like crazy has slowed down to a great extent. Demand for jewellery, coins and bars have declined subsequently.

However prospects of Gold reaching the mid level of 1800 USD an ounce is likely this year if any major event happens. It is expected that a breakdown in negotiations over the US debt ceiling will spark investment buying, which will result in Gold reaching the level of USD 1800.

Factors affecting Gold Prices

However looking at the other side of the coin, we see that there are several factors which can support the price of Gold but again the effect will be short-lived. Factors like lack of confidence over the US debt ceiling or US monetary easing or concerns pertaining to the debt ridden Euro Zone are some of the factors which will push a upward movement in the price in immediate period.

Read about The Indian Gold Habit – Reason, Problem & Solution.

Gold Bear Cycle in 2014

After the major global recession and double recession in Euro Zone, it is highly expected that the year 2013 will taste the fruit of economic stability. This will certainly result in a longer-term decline said the expert of precious metals research. As far as the global economic conditions are concerned, it is almost certain that there will soon be a start of gold bear cycle in 2014.

The current spot price of Gold is at 1550 USD, one of the lowest figures since May 2012 and it may slip further, as the market is unlikely to see any fresh rush of investors. The involvement from pension funds is quite limited and it is difficult to see their increased investment in Gold. After four years of perfect participation, it is rare that the funds from pension funds/mutual funds etc. could be attracted towards gold. This is definitely a worry as weight-of-money seems to be saturated for now.

For the year 2013, it is expected that the gold will trade in the range of 1500 USD to 1850 USD an ounce, however the mark of 2000 USD is not on the cards for now. The year 2013 will see a rise in price of Gold as compared to the year 2012 but again with substitution of investment instruments, lack of demand, liquidity and investors, it will pull down the price in early 2014.

India to Reduce Gold Imports

As far as the Indian economy is concerned, the recent emphasis laid by the Finance Minister on the investment in other instruments like Equity Market (Rajiv Gandhi Equity Scheme), Mutual Fund, Gold ETF, Index Funds, Inflation Funds, or interest funds for that matter, will definitely help the economy reduce the import of the gold as a result of which the global demand will get affected thus pulling down the price.

Read about the Costs, Advantages and Drawbacks in Buying Physical Gold from the Indian Post Office.


In a nutshell to conclude we can say that the shine of gold will not last for long and a correction (downfall) is expected in the coming year. The event will definitely affect some of the major economies having major investment in gold but again it will help curb the rising price of the precious metal to some extent. The move will make the metal accessible to the retail investors and common people.


Niraj Satnalika

Niraj is an MBA in International Business (Finance). Prior to this he completed B.Tech in Electronics and Instrumentation. He is currently working with Confederation of Indian Industry (CII), Kolkata in capacity of Consultant. Satnalika is actively involved with an NGO and works towards promoting education among the underprivileged.

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