The price of gold hit an all-time high in India on Wednesday, crossing the Rs 50,000-mark for the first. The active gold contract on MCX touched Rs 50,020 per 10 gms following the gold in dollar at a 9-year high.
The gold prices have gone up by 28 percent so far this year, after gaining 25 percent in the previous year. Gold is up 28 percent from March lows.
The still-rising COVID cases globally and the recent historic deal clinched by the European Union leaders -- the Europe stimulus package now stands at $2 trillion -- led to the latest surge.
This week will also see the US work on further stimulus measures. So, gold is likely to be in favour even more so. The weak dollar, lose monetary policies, low real yields, record inflows into exchange-traded funds and increased asset allocations support high prices even as physical buying is low.
The gold prices are now trading at $1860 an oz, close to the all-time high of $1920 hit in September 2011. Immediate support levels now are $1800-$1790 while the upside is an all-time high. Goldman Sachs, Bank of America and Citi have forecast $2000 an oz for gold in this year or next.
But it's silver that stole the limelight in the near term. Silver has gone up 12 percent in two trading sessions and 30 percent in 2020. It has gained 85 percent from its March lows.
Silver is at 7-year highs in global markets and at a 9-year high in India. It still has to catch up, with the gold-silver ratio tilted in the balance of silver-buying.
Silver at $22 an oz is way below its all-time high of $48 an oz but it's not going to be a straight line of gain. However, the precious metal could surprise with gains on the higher side and faster. Therefore, the advice would be, if you have Rs 100 to invest in precious metals, put Rs 70 in silver and Rs 30 for gold.
For a 2-year view though, keep your investments in gold.
First Published: IST