With most of the central banks worried about the future state of the economy and the extent of damage this pandemic has brought on, the prices may remain in uptrend.
Gold has been the investor’s choice in recent time thanks to its ability to provide consistent returns especially when things across the globe are full of uncertainty.
Gold prices have risen multifold as the COVID-19 crisis acted as a catalyst in pushing the safe-haven demand.
Governments, however, are trying to uplift the crumbling economy through relief measures and stimulus packages and relaxing lockdowns measures to support the manufacturing sector which seems to be working in the short term but the long term view remains uncertain.
The equity markets witnessed a decent bounce back taking cues from stimulus measures, at the same time the yellow metal prices also kept its northward journey intact from its sub Rs 40,000 levels in March 2020 to the current levels of close to Rs 49,000 which is against its trait, but this time the situation is different as devaluing currency due to stimulus measures, lower interest rates, trade issues escalation between the US and China kept the safe-haven appeal intact.
The Gold prices touched a 9-year high recently crossing $1,800 per ounce mark at Comex and Rs 49,000 per 10 grams at MCX still looks like an open opportunity in the near term from a retail perspective as well.
With inflation on the rise as we witness more and more money being pumped into the economy by the central banks at the same time ongoing physical gold procurements by central banks suggests that the rally is not over yet.
If we also take into account the recent spike in Gold demand through ETF's where 2016 full year purchase value of $23 billion worth of ETF's was surpassed this year in the 1st half with a staggering number of close to $40 billion ETF investments already.
The ever increasing COVID-19 cases across the globe and the continued race for vaccines is a key factor to look at going forward as many things depend on the same.
With most of the central banks worried about the future state of the economy and the extent of damage this pandemic has brought on, the prices may remain in an uptrend and if things continue the way they are, we may see the prices cross Rs 52,000 per 10 grams mark by the year-end at MCX and close to $1,900 at Comex.
The Author is Head Commodities and Currency at Axis SecuritiesDisclaimer: The views and investment tips expressed by investment experts on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.