Obama is in, I mean he is not out!
Gold prices are poised to chart new highs given that a QE friendly President has retained his seat in the White House, investor community thinks. Mitt Romney who put up a brave fight had an avowed anti-QE stand estranging him from the commodity bulls.
However, it has to be noted that US Presidential elections is just a temporary factor affecting gold prices. The key issue still remains the Eurozone.
The Eurozone crisis is still light years away from being over and each day stores a bad news worse than previous.
The 'last of the spending cuts' as professed by the Greek government there would be put to vote today.
If the Parliamentarians there vote against further austerity measures, chances are more that the troika of lenders would abandon Greece leading to the eventual exit of Greece from the currency union ccreating a markett anarchy. But this possibility has been ruled out by certain analysts.
Meanwhile, the German Chancellor Angela Merkel has said that it would take at least 5 years until the Eurozone crisis subside. That means we have half a decade ahead of us packed to the brim with uncertainty.
What more could gold prices ask for if not certain uncertainty continuum.
Now, when we think of the demand side, with higher import duty persisting in India in gold, one of its major consumers, the country would see some grave demand destruction. This can play a dampener as far as yellow metal prices are concerned. [India is expected to import only 550 tons of gold in 2013 compared to 967 tons in 2011; a drop of 45%.]
However this factor would fail to outweigh the eurozone crisis in determining the price of gold as gold markets do not hinge entirely on India. For instance, there is China, whose demand is reportedly back on the upside.
High crude oil prices is also a factor that would kill the imports of gold by India. With relatively limited foreign exchange reserves, India spends a lion's share of the same for import of crude oil. Gold, not being an essential commodity would be a victim of 'crude oil trade-off' as the government could not compromise on the imports of latter.
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