The insatiable appetite for gold of Indian consumers, peppered with economic uncertainty over the years, has seen the yellow metal outperform equity markets over the past decade. From around 20,000 rupees per 10 grams in Dhanteras, a day considered conducive to buying gold and gold jewelry, in October 2010, gold prices have risen a staggering 159 percent since then to 53,610 rupees per 10 grams on Thursday on the occasion of Dhanteras, sample data.
“Over the last decade, gold in India has returned 159%. Compared to equities, Dow Jones has given around 154% and the Nifty 50 national equity index has given a 93% return over the same period, making gold a star player and particularly justifying the goal of protecting against inflation and depreciate the rupee for Indian investors, ”said Navneet Damani, head of commodity and currency research at Motilal Oswal Securities.
Over time, gold found support in healthy buying from central banks, record ETF purchases, and good institutional participation as a safe haven. The trade tension between the United States and China also supported prices as the world’s two largest economies imposed trade restrictions and sparked a rush into this asset class. Other than that, and the lockdown brought on by the Covid-19 pandemic also caused investors to buy gold as global equity markets plummeted.
However, the yellow metal began to consolidate once lockdown restrictions were eased, followed by news of the development regarding the Covid 19 vaccine. All of this prompted investors to inject money into riskier assets, reducing losses. yellow metal prices at $ 1880 levels. Nationwide, MCX prices reached an all-time high of Rs 56,200 in August 2020.
With the accommodative policies of global central banks and stimulus, analysts expect gold prices to prosper. However, much will depend on how the macro situation plays out. That said, calendar year 2020 (CY20) may turn out to be the worst year for gold demand in India since 1995 if current trends are extrapolated to full-year forecasts.
According to the World Gold Council (WGC), the demand for gold in India so far in CY20 is 252 tonnes, compared to 496 tonnes in the same period last year. Even if the October-December 2019 (Q4CY19) demand of 194 tons is added to the CY20 demand so far, the total CY20 demand will be less compared to the CY19 total demand of 696 tons. READ MORE HERE
“In the short term, Comex Gold could form a base of around $ 1,880 – $ 1840, while rallies are likely to be capped in the $ 1940 – $ 1975 range. On the domestic front, we recommend starting to accumulate gold. with each drop towards Rs 49,500 – 48,500, which is a good range to buy. The bright side, for now, is capped at Rs 52,000 – 53,000 levels. In the long term, we continue to maintain our goal of $ 2,500 on the Comex and 65,000 to 67,000 rupees on the domestic front, ”Damani said.
Those at Axis Securities also remain bullish on the road ahead of gold prices, saying that additional stimulus measures to deal with the pandemic, lower real yields supported by higher inflation around the world may support the prices up to levels of Rs 52,500 – 53,500 again in a month.
“Buy Gold Mini / Gold in a staggered fashion: the first tiers around Rs 49,200 – 48,700 / 10gms and the second around Rs 47,700 / 10gms for a target price of Rs 56,100 / 10gms initially and then Rs 60,500 / 10gms, while placing stop loss at Rs 46,900 / 10gms ”advises Sugandha Sachdeva, Vice President of Metals, Energy and Currency Research at Religare Broking.
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