With India’s wedding season among us, gold prices have started to turn up slightly due to a higher demand for gold. Last week India’s gold spot price fell 2%. India’s wedding season will end the last day of December sending the demand for gold down. Healthy Financial Habits is predicting that the India gold price will drop going into January due to the shortened demand in the post wedding season.

In the United States gold prices have dropped below $1,100 for the first time in a month on the New York Mercantile Exchange. The sudden drop in gold prices can be attributed to a strengthening dollar. The dollar has been on the rise after recent data showed that the US economy may be on the road to recovery.

The information showed better than expected employment figures along with a boost in retail sales. In addition the dollar index jumped whenever the Euro took a hit after Greece’s credit rating was downgraded earlier this month.

Gold prices will likely suffer going into the new year as investors sell  their precious metal in order to capture profits prior to the end of 2009. Other gold investors are selling because they fear the idea if the Federal government raising interest rates as early as the middle of next year. Although the federal government stated last week that they do not plan on raising the interest rate in the foreseeable future, some gold investor are not taking any chances. Whenever interest rates rise the value of the dollar tends to increase. As the dollar increases the value price of gold tends to decrease. The dollar index and price of gold have an inverse relationship.

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Author: Allen Dukes