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    Gold prices correct after hitting all time high: What investors should do

    Gold prices correct after hitting all time high: What investors should do

    Gold prices correct after hitting all time high: What investors should do
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    By Nirav Vyas   IST (Updated)

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    Analysts believe that, since the several short-term uncertainties are over, the yellow metal may remain range bound or correct further. However, they said the outlook for gold prices remains positive in 2020.

    After giving robust returns in 2019, gold is off to a great start in 2020, hitting a record high after geopolitical tensions in the Middle East and muted outlook for economic growth. Global gold prices on Wednesday touched a seven-year high and Indian gold hit an all-time high after Iran attacked US airbases in Iraq in retaliation of the death of Tehran’s top military commander in a US airstrike in Iraq. Gold rates in India surpassed the Rs 42,000 level to hit fresh-highs of Rs 42,270 on the Multi Commodity Exchange on Wednesday. Global gold prices hit their highest since March 2013 at $1,610.90.
    However, gold dropped nearly 1 percent on Thursday as the prospect of an escalation in US-Iran conflict waned after the two sides eased war rhetoric. Spot gold rate fell 0.7 perecnt to $1,545.47 per ounce by 1:40 PM, having earlier slipped to $1,539.78 an ounce.
    Graphic: Reuters
    Outlook for 2020
    Analysts believe that, since the several short-term uncertainties are over, the yellow metal may remain range bound or correct further. However, they said the outlook for gold prices remains positive in 2020.
    "Gold outlook remains bullish in H1 2020 with continued geo-political uncertainty, moderate global growth and a conducive interest rate environment," said ICICI Bank.
    "We do not rule out further upside to the USD 1600/oz level. However, an improvement in sentiments and global growth over H2 2020 is likely to weigh on prices," it added.
    Chirag Shah of Nirmal Bang said, “Gold may remain under pressure in the near-term since uncertainties around Brexit, US-China trade dispute and geopolitical tensions in Middle East are receding.”
    Chirag Sheth of Metal Focus said gold outlook for next 2 year is bullish and the yellow metal is expected to trade in the range of $1,610 to $1,620. On the down side, it could touch $1,500, he noted.
    Shah said upcoming US elections, US-China trade deal and a pause in US Federal reserve policy is likely to impact global gold movement, said Shah.
    What investors should do
    Sheth said the recent price correction is good opportunity for long-term investors to invest.
    Shah expect that gold is likely to give 8-10 percent CAGR in the next three to four years. In the upward trend, Indian gold prices may trade in the range of Rs 41,000 to Rs 42,500, Shah said. A level in the range of Rs 39,000 to Rs 38,500 could be lower level support for the prices.
    ICICI Bank expects gold to average ~$1500/oz in 2020 compared to $1393/oz in 2019.
    In 2019, gold prices had risen by 24 percent, while it had inched up by only 0.9 per cent in 2018, and in 2017, it was up 12.7 percent.
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