View On More upside potential in Gold prices in coming year By Mr. Abhishek Chauhan, Swastika Investmart Ltd
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Below are Views On More upside potential in Gold prices in coming year By Mr. Abhishek Chauhan , Head Commodity and Currency, Swastika Investmart Ltd
The economic slump started in early 2018 when Trump Government started a trade war with China. The situation start to become worse when the pandemic hit the entire world. In this scenario, Gold emerged as safe heaven as always it remained. In MCX, the yellow metals reached an all-time high of 56191 while they made a high of USD 2075 in the Comex division few months back. A sharp turn in global monetary policies started in 2019, which gave more shine to gold prices in all the currencies across the world.
Within two years the Gold prices have gained more than 75% per 10 grams. Recently due to ease of Covid-19 cases Gold prices have corrected around 50% of the total gain of last two years. As the global economy is coming out of the pandemic damage, the Bond tapering decision of the Central bank putting Gold prices down. However, merely bond tapering will not stop inflation to go up. It required more hawkish steps to control it. The upside potential in Gold prices is looking good from current levels of 47500 because inflation is rising across the world.
The pandemic has not gotten over and covid cases are increasing gradually in China. The supply of essential commodities is disrupted causing the increase in inflation and the flow of commodities supply will take more than a year to improve up to its pre-pandemic levels. The outlook for Gold will remain strong despite the massive vaccination program and economic revival mainly due to inflation and the economy requires more stimulus to reach pre-pandemic levels.
The physical demand in India and China will remain strong as it was weak due to pandemic and economic slump. The rate of interest is running at the lowest levels and major Central banks can not increase as the current situation is required more jobs, more support to the economy. In the upcoming year, we are expecting Gold prices to move towards 52000-58000 levels.
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