Home FEATURED NEWS Gold Rate: Why gold prices are rising – Key things to know | India Business News – Times of India

Gold Rate: Why gold prices are rising – Key things to know | India Business News – Times of India

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Gold Rate: Why gold prices are rising – Key things to know | India Business News – Times of India

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(Representative image)

NEW DELHI: Gold prices have been ruling at unprecedented highs in India and global bullion markets as investors are preferring safe haven assets amid economic uncertainty triggered by the Covid-19 pandemic.
World Gold Council managing director (India) Somasundaram PR noted that gold price topping Rs 50,000-mark is a key milestone and response is naturally mixed — happy investors and wary consumers.
The domestic prices are influenced by an interplay of several global factors — low or negative interest rates, and turbulence caused by trade strife and geo-political tensions, he said.
Rupee-dollar exchange rate also contributed to domestic price rise, amplified by Covid-19 related disruptions and a general sense of insecurity, Somasundaram said adding volatility with an underlying bullish sentiment is to be expected as disruptions and uncertainty caused by the lockdown and fear-induced behaviour continue.
Will gold prices rise further?
The gold price is likely to spike further in the next 12 months following the US elections, Covid-19 related disruptions and geopolitical tensions, jewellery brand PN Gadgil managing director and CEO Saurabh Gadgill said.
“We are expecting gold to reach around Rs 65,000 per 10 grams in the domestic market in the next 12 months, while hitting $2,500 an ounce in the international markets,” he opined.
Why gold is considered a safe haven?
Gold which is an integral part of wedding ceremonies in India is mostly used as a hedge against inflation and considered as a safe haven for investors during periods of uncertainties.
“Gold is traditionally used as a hedge against inflation, and global economies are considering further stimulus to boost growth, which may fuel inflation further. We expect precious metals to trade firm until the number of global cases of Covid-19 is under control or a vaccine is introduced in the market which is still a few months away,” said Nish Bhatt, founder and CEO, Millwood Kane International said.
Vaibhav Saraf, director, Aisshpra Gems and Jewels, opined that gold has always been a safe haven for investors globally.
“Increasing international border tensions, trade wars and Covid-19 are fuelling this growth further. Demand will be affected in the short run, but once the price stabilises, buyers will accept the price and demand should increase again,” he said.
Falling consumer demand
The jewellery industry is expecting the consumer demand for gold to falter further amid surging prices of the precious metal and economic slowdown.
“The demand is already very sluggish at the moment with only 20-25 per cent business taking place following the economic slowdown, insecurity over jobs, social distancing and lockdowns due to Covid-19. The high price of gold will add on to the already sluggish consumer demand,” All India Gem and Jewellery Domestic Council chairman Anantha Padmanabhan said.
(With PTI inputs)

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