Gold, always considered a safe haven for investment in uncertain times, is likely to glitter more and even soar to Rs 63,000 per 10 grams next year amid expectations of fresh stimulus measures and weaker American dollar.
In 2020, the economic and social uncertainties triggered by the coronavirus pandemic turned the spotlight on gold as a safe haven. The price of the yellow metal reached an all-time high of Rs 56,191 per 10 grams at MCX and $2,075 an ounce in the international market in August.
A sharp turn in global monetary policies that led to a low interest rate scenario and unprecedented liquidity, which began in mid-2019, gave a boost to gold price in all major currencies, making the yellow metal attractive for investors.
“The year began (with gold) at Rs 39,100 (per 10 grams) and $1,517 (an ounce). The knee-jerk reaction to the pandemic was short-lived as the domestic price hit a low of Rs 38,400 from where it steadily rose all the way to Rs 56,191. The stimulus provided subsequently triggered a sharp rise in investment buying in the domestic market,” Commtrendz Risk Management Services CEO Gnanasekar Thiagarajan said.
He said the outlook for gold remains strong despite coronavirus vaccine prospects and economic revival post Covid-19, mainly because of fresh stimulus expectations.
“The dollar could weaken on the back of more stimulus and that could help gold prices rise once again. Also, inflationary expectations due to the massive stimulus can be seen as a positive factor that could attract investment buying once again in 2021,” he said.
The political risk in the US because of a weak majority in the Senate could make things difficult for the incoming Joe Biden-led administration to push reforms and that could aid in the bullion’s upward movement, Thiagarajan said.
“The physical demand (for gold) from India and China will take centre stage in 2021, which has been weak for the past few years and could see a strong revival. We expect prices to test Rs 60,000 or $2,200 at least in 2021, provided the rupee remains stable too,” he opined.
HDFC Securities senior analyst (commodities) Tapan Patel said the yellow metal is likely to remain bullish next year on concerns over global economic recovery.
