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Gold price likely to move towards Rs 52,000 per 10 grams in coming 12 months, analysts say

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Gold price likely to move towards Rs 52,000 per 10 grams in coming 12 months, analysts say

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As uncertainties continue to loom over global economic growth amid a series of events since the start of this year, the safe-haven appeal for gold has skyrocketed and analysts expect the prices can surge near Rs 52,000 per 10 grams in next 12 months.

Gold price likely to move towards Rs 52,000 per 10 grams in coming 12 months, analysts say
As uncertainties continue to loom over global economic growth amid a series of events since the start of this year, the safe-haven appeal for gold has skyrocketed and analysts expect the prices can surge near Rs 52,000 per 10 grams in next 12 months.
A number of events such as the US-China trade war, geopolitical tensions, dovish central bank actions and many more have been increasing the bets for the safe-haven asset. These, along with the menace created by COVID-19, have severely hurt the economic growth of all major economies leading the risky assets to bleed.
The International Monetary Fund has predicted that the global economy may shrink by 3 percent in 2020 due to the virus outbreak, in the worst downturn since the Great Depression of the 1930s.
In 2019, gold prices have rallied over 25 percent and this year again the yellow metal has given around 10 percent returns.
“It’s a hedge against inflation, investment and it is insurance depending on the market participant. Under the time of distress or panic, gold performs best as investors want to get out of the riskier assets and take shelter under the safe-haven asset i.e. gold.  Metal prices have had an aggressive run just in the last one year hence it is one of the best indicators to gauge the level of uncertainties in the market,” said Navneet Damani, VP – Commodities Research, Motilal Oswal Financial Services.
As the lockdown has taken effect in major countries globally, there is serious trouble getting created in the market for the supply-demand scenario.
In such circumstances, Damani suggests investors turn their focus to other sources of investments, that is paper gold, ETFs, digital gold (ME-Gold) or trade on the exchange directly depending on the risk appetite and the tenure for which an individual wants to invest.
Meanwhile, buying in gold exchange-traded funds (ETF) has started. Investors infused over Rs 1,600 crore in gold ETFs in 2019-20, after pulling out money for the last six financial years, as the coronavirus outbreak spurred safe-haven buying.
The inflows meant asset under management (AUM) of gold funds surged by 79 percent to Rs 7,949 crore at the end of March 2020, from Rs 4,447 crore in March-end 2019, data from the Association of Mutual Funds in India (Amfi) showed.
Further, interest rate cut by most of the central banks in the world along with monetary stimulus measures has pumped heavy liquidity in the markets and economy. Easy money in the markets is always positive for the yellow metal.
“Since we have seen such a good run up and liquidation in other asset classes, there could be bouts of correction in the near term. But the medium-term picture still looks very promising and expect gold on the Comex to above $2,000 and domestic gold prices could target upwards of Rs 52,000 over the next 12 months,” Damani added.
The below chart gives a technical perspective on how gold could move on the domestic market over the next 12 months.
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