Gold prices at 4-month high, analysts see further 15-20% rise

• Follow

Gold prices are trading at a four-month high tracking the global mood. Gold has been surging higher for the past four straight sessions led by weaker US dollar, concerns surrounding inflation, and ahead of the US Fed minutes for further clarity on economic recovery and policymakers’ view on inflation. However, there is a wide expectation by experts that the Fed will not adjust its monetary policy to handle inflation.

The US Dollar Index is holding close to a near three-month low against its rivals, making gold less expensive for other currency holders, resulting in further attractiveness. Analysts believe that investors are increasingly investing in gold as a hedge against inflation now.

In the domestic markets, gold rate began increasing starting May 14 after going down and remaining stable. The wedding season had led to demand for gold but customer sentiment so far remained sombre by and large due to ongoing Covid pandemic and lockdown-like restrictions.

On Multi Commodity Exchange (MCX), gold June futures were up by 0.16% to Rs 48,384 for 10 grams in afternoon trade.

In physical markets, the gold rate in Mumbai rose to Rs 45,640 per 10 gram of 22-carat and Rs 46,640 per 10 gram of 24-carat.

In New Delhi, gold prices went up by Rs 310 per 10 gram. For 10 gram of 22-carat gold, you need to pay around Rs 45,640. In the case of 10 gram of 24-carat gold, buyers need to pay Rs 46,640.

Experts are pointing out how on a technical basis, international gold is now trading back above its 200-day moving average is precisely what market technicians wanted to see to gain confidence in gold’s long-term potential to gain value. The last time gold traded and closed above its 200-day moving average was February 1.

Anuj Gupta, Vice President (VP), Commodity and Currency Research at IIFL Securities said, “We are expecting 15-20% return also in this year in gold. Inflation, geopolitical tension and higher crude oil prices will support the gold and silver prices going forward. Investors should buy gold for long term for return in the investments.”

Vandana Bharti, Commodity Analyst at SMC Global said,” Dollar index saw a very sharp fall from the high near 93.5; now trading below 90. It will keep supporting the commodities prices on the higher side, especially gold on the higher side. Though appreciation in INR which appreciated from 75.5 to nearly 73 levels may keep the upside capped. 48,400 is immediate resistance for gold. If it breaches 48,400, then one should eye on the level of 48,800-49,000 whereas support is near 47,700.”