Safe Bet- Five Reasons That Will Lead Gold to All-time High Price

Business Standard Safe bet: Five reasons that will lead gold to all-time high price

Indian households supposedly hold 25,000 tonnes of gold valued at Rs.121.5 trillion, or almost 60 per cent of India's GDP.

Gold price hit $1800 in New York's Comex Futures and appear headed for an all-time high level of $1900 in the international market, lifted by investors seeking a safe bet as the world battles coronavirus pandemic .

In India, prices calculated with 3 per cent Goods and Service Tax (GST) crossed Rs. 50,000 per 10-gram mark. Silver in Futures on MCX is trading at Rs 50,300 (without GST). In 2011, gold reached above $1900 and then fell sharply to consolidate at lower levels for years after falling to near $1,000. Gold usually has a price cycle of 8-10 years and after consolidating for years it has entered a bull cycle.

“Gold continues to have plenty of upside from current levels. We expect prices to come close to the 2011 peak of $1,921, although that level may not be breached this year," said Metal Focus, a London-based bullion and metal research firm.

"This may not to be a straight line rally and there will be periods of liquidations which will potentially take it to levels as low as $1,600. Investors should buy at such. That will make such dips short lived. Overall, we forecast the gold price will average $1,700 in 2020, up 22% year-on-year,” said Metal Focus.

Gold averaged $1,647 per ounce in 2020. The price rally this year has made Indian investors holding gold for the last 12 months richer by Rs 36.5 trillion. In the last 12 months, gold price in India has increased by 43 per cent to trade in the physical market at around Rs 48,600 per 10 gram. Indian households supposedly hold 25,000 tonnes of gold valued at Rs.121.5 trillion, or almost 60 per cent of India’s GDP.