After underperforming for a while, domestic gold prices are expected to surge towards highs of R52000-53000 in the next twelve months, Motilal Oswal Financial Services said in a report.
A host of domestic and international factors are expected to fuel the prices of gold taking them closer to towards the highs of Rs 52,000-53,000 over the next year, its earlier peak, Motilal Oswal Financial Services (MOFSL) said in a report.
However, the current scenario could have some short-term hiccups, giving investors a better buying opportunity, it added.
“We have been bullish and continue to maintain a positive bias for gold price over the next 12 months, and expect that the consolidation is stretched could see some directional move soon,” the report said.
Starting with the domestic trends, as per the World Gold Council data demand for the yellow metal for the quarter ended September ’21 stands at 139 tonne, up 47 percent from 94 tonnes in the previous year. In India, with COVID-19 relatively under control, the pent-up demand for jewellery has seen a jump of 58 percent as compared to the previous year during the July-Sep 2021 period.
After 52 percent and 25 percent surge in gold prices in 2019 and 2020, respectively, gold prices moderated in 2021. The prices of yellow metal hovered between Rs 47,000 and Rs 49,000. However, since then, the demand for gold in India has bounced sharply from the lows of 2020.
Post stringent lockdowns, gold consumption declined about 49 percent in the first three quarters of this year. However, the upcoming festive and wedding season is expected to bolster the demand for jewellery and help improve the consumption numbers, MOFSL said.
The overall sentiment for the upward movement in prices is supported by the fact that the central bank is on a gold buying spree and CFTC positions maintaining their position in net longs.
On the international front, despite turmoil in global markets due to tapering and rising inflation – metal prices have held their base on the back of lower interest rates and its overall appeal as a safe haven from inflation.
Other global uncertainties like China's Evergrande fiasco, power shortage issue, US-China trade battle, surging Covid cases due to Delta variant and ballooning debt are affecting the overall investment sentiment and working in favour of gold prices.