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The price of gold is expected to rise above the Rs 56,500-level (per 10 gm) over the next 12-15 months, according to a report by Motilal Oswal Financial Services.

"On the domestic front, the post-budget price correction is a good level to enter an immediate target towards Rs 50,000 and eventually hitting new highs of Rs 56,500 and above over the next 12-15 months," it said.

Gold's volatility in 2021 until now has been no less than any ride in an amusement park, the report said, adding that after a good rally last year, the market witnessed some profit booking and consolidation at the lower levels amid the US Presidential election uncertainty, vaccine reports from various pharma companies and volatility in dollar and yields.

This led to some profit booking in ETFs and CFTC positions suggesting that speculators too gave up their positions, hence affecting the overall sentiment. Although, with all these uncertainties, the precious metal pack was backed by strong fundamentals which kept the hopes high for all bulls.

"While we talk about the pandemic and bullions fundamentals, it is hard to forget the supply and demand dynamics that have been changing due to the measures the government announced in these times. The year 2020 started with prices at peak as there was ample demand and not sufficient supply," the report said.

Physical market was hit, as amid the pandemic, stores were shut and market participants could not go out and buy or recycle their gold. On other hand, with less gold recycling and mines taking a hit, the overall supply was in question.

Talking about demand and supply numbers in Q1, according to World Gold Council, strengthening consumer demand mitigated the impact of ETF outflows as global economies continued to recover. And total supply fell 4 per cent in Q1 despite increased mine production.

In 2021, the pandemic struck again and a lot of economies announced stricter restrictions that led to safe-haven buying in the precious metal pack. Covid cases are still on the rise in India and the pandemic fears still hovers the market, but the situation is a bit different from last year.

A complete lockdown is not yet announced pan India. While there are a few restrictions, the demand supply dynamics are different from the previous year. Also, import duty cut was declared earlier this year in the Union Budget announced by the Centre, which also weighed on the prices and encouraged jewelers to import more.

The effect of the same can already be seen as the March import numbers were reported at 160T which is almost 470 per cent higher than the previous year. Strong fundamentals are helping gold gain momentum and are justifying our bullish stance maintained for more than a year, the Motilal Oswal report said.

Akshaya Tritiya, an annual spring-time festival of the Hindus and Jains, is approaching this week. Gold's demand increases more during such festivals and looking at the import numbers, the same is expected this time too.

There is definitely a concern of restrictions that are re-imposed in almost all parts of the country although the lockdown situation is better as compared to last time. Also, with physical gold there are many platforms like online gold (Me-gold), ETFs, and others, which the market participants can select from depending on their risk.

"Gold prices tend to increase during this festival; there are only fewer cases where the prices have consolidated or traded sideways. Going with the historical trend, and the current fundamental and technical set up, the prices could maintain the upside momentum," the report said.

"Prices have consolidated over the last few months and recently caught up some momentum and returned to around $1,800 on the COMEX where we are comfortable suggesting buying for a short to medium perspective targeting new life time highs towards $2,050 followed by $2,200," it added.