Gold headed for a big slump in May?

So the equity markets are moving up across the globe. Then can the fall of gold
be far behind. No! And true to the prediction of market analysts, gold started its hurtling down in April with right earnest.

In fact, April was the cruelest month for gold if you compare the prices.

Gold climbed down, capping the sharpest monthly drop since October, as rising equities and a stronger dollar reduced demand for the precious metal as an alternative investment. Silver also plunged, said market observers.

Gold moved down 3.7 per cent for the month, the most since October and the second straight decline.

The MSCI World Index of equities headed for the second straight monthly gain on mounting speculation that the worst of the global recession is over. The dollar rose 0.2 per cent against a six-currency basket.

According to market analysts, the April slide in gold resulted from dollar strength and much-improved global equity markets.

Gold futures for June delivery fell $9.30, or 1 per cent, to $891.20 an ounce on the Comex division of the New York Mercantile Exchange. The most-active contract fell for the third time in the past four days.

Earlier, gold touched $880.10, the lowest in a week. The price may drop as low as $877.90.

Silver
futures for July delivery tumbled 45 cents, or 3.5 per cent, to $12.325 an ounce. The most active contract slumped 5.1 per cent this month. The metal still has climbed 9.1 per cent this year.

If the equity markets fare well in the coming days, which is likely considering the fact that across the economies there is an upward movement, the gold prices are likely to fall further. So, the April fall may be just the beginning of a bigger slump for gold.