Thursday, October 10th 12:18 PM IST

Gold attractive for long term buyers: Jeff Nichols

# gold  # US Fed tapering  # bullion vaults  # India festival  

Gold prices could witness a significant rise in the next 3-5 years when large traders in futures market who have sold reently resume buying. Hundres of tons of bullion bars have travelled from depositories in New York, London and western vaults to Hong Kong, Shanghai and East Asian region.

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NEW YORK (Bullion Street): Gold looks vulnerable in the short term and could perhaps be volatile but the metal is attractive for longer term buyers, according to Jeff Nichols, precious metals economist and Managing Director of American Precious Metals Advisors.

Gold prices could witness a significant rise in the next 3-5 years when large traders in futures market who have sold reently resume buying. Hundres of tons of bullion bars have travelled from depositories in New York, London and western vaults to Hong Kong, Shanghai and East Asian region.

"When sentiment shifts and Westerners look more favorably on gold, Asian holders will not likely sell, except at extraordinary price levels," Jeff Nichols said in a market update.

Talk of tapering and uncertain developments on the U.S. fiscal and debt fronts could drive gold one way or the other in the weeks ahead. For sure, the partial Federal government shutdown - depending on how long it continues - will negatively impact consumer spending, unemployment, and economic activity.

And the longer it lasts, the less likely is any imminent change in U.S. monetary policy.  The Federal Reserve will not risk adoption of policies that might trigger a full-blown recession.

Looking ahead, Indian festival and wedding-related demand, restocking by jewelry manufacturers worldwide in anticipation of Christmas and New Year retail buying, continuing strong demand from China, and a pick-up in central-bank acquisitions, should underpin the gold price and could contribute to a resumption of the long-term uptrend in the metal’s price, Jeff Nichols added.

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