Gold price is likely to gain at least 12 per cent this calendar year on intermittent demand from institutional investors and safe haven buying from retail consumers, especially in the US where presidential elections are due in November.
Trading currently at Rs 48,041 per 10g after hitting a record high of Rs 48,380 per 10g on June 24, gold price in India is forecast to set a new record of Rs 54,000 per 10g in Indian markets by the end of this calendar year. The upsurge in the rupee value of gold would follow similar a move in its prices in global markets.
Gold has proved to be a safe bet against a slowing global economy due to the increasing number of coronavirus (Covid-19) cases and geopolitical tensions with China. Gold has proved to be the only asset class in these uncertain times to offer 23 per cent returns in the first half of calendar 2020 and a staggering 41.6 per cent in the last one year. Since its level of Rs 27,840 per 10g in January 2017, gold investors have become richer by 72.6 per cent.
“Fundamentals are currently in favour of gold prices. The Donald Trump administration in the US would try to capture citizen’s eyeballs with lots of luring pictures to revive the country’s economy which has been severely hit because of Covid-19 pandemic. The US financial markets might see fresh announcements to bring the economy back on track which may keep the dollar under pressure and support gold. Apart from that geopolitical tensions between China and the rest of the world also favour gold to hedge against economic downturn. Thus, we see gold prices touching Rs 54,000 per 10g with sharp volatility by the end of calendar 2020,” said Padmanabhan, managing director, NAC Jewellers, a Chennai based jewellery retailer.
Among other fundamentals, rising unemployment rates across the world is a major cause of worry. Despite falling imports into India and China, gold prices are moving up due to high investment and consumer demand in the US. A Metal Focus report suggests gold supply to remain lower by 5 per cent this year. Metal Focus, a London headquartered research firm, said gold price for 2020 would average $1700 per ounce against the first half average price of $ 1661.
In international markets, gold prices reported a gain of 16.7 per cent in the first half of calendar 2020. Gold price in the London spot market is currently quoting at $1771.3 an oz, a rise of phenomenal 47.6 per cent since October 2018 and 25.7 per cent in one year.
The jump in gold prices in the rupee value was sharper than in dollar prices due to the 8.6 per cent depreciation in the Indian currency during the last one year. On Friday, the rupee closed at 75.6 against a dollar compared to 69.2 against a dollar, a year ago.
Meanwhile, in a major worry for the global…