Gold and dollar

Gold has increased by 23% in 2020. What’s next?

In India, the yellow metal increased by approximately 28% this year. According to analysts, gold will continue to remain in focus for investors. Additionally, in global markets, the precious metal has advanced by 23% in 2020, supported by a raft of pandemic stimulus measures that stoked fears of inflation.

According to the Founder and CEO of investment consulting firm Nish Bhatt, after a 23% gain in 2019, this will be the second year in a row that the precious metal will be posting massive growth.

Additionally, the yellow metal has posted a marginal gain. It is based on the concerns of a slowdown in economic growth during the first month of the year. A significant rise was seen in gold prices from mid-March when the coronavirus pandemic hit the stage globally. In August, the precious metal had touched a lifetime high of Rs 56,200 on Multi Commodity Exchange.

However, since August, the yellow metal had declined by approximately 10% gains from their all-time high levels of optimism over coronavirus vaccines. Significantly, gold trades around Rs 50,300 in the futures market.

Gold would remain in focus for investors in 2021

Nish Bhatt added that gold would remain in focus for investors in 2021. Central banks worldwide have pledged to keep rates low and easy liquidity to aid growth. The latest installment of the stimulus package from the U.S. government will add to the existing dollar liquidity in the system. It will also weaken the U.S. dollar. Therefore, a weak greenback may lift gold prices. Bhatt also announced that the vaccine’s efficacy, proper implementation of the vaccination process in developing countries, low-interest rate regime, and the global central bank’s liquidity stance would boost the yellow metal prices in 2021.

Additionally, Axis Securities has a neutral stance on gold. As brokerage announced, overall investor’s sentiments have improved. Investors are betting higher on riskier assets like equity. The enthusiasm over the coronavirus vaccine further stoked these improved sentiments. Therefore, all these improvements are keeping the gold prices under pressure. The global economy’s progress and the predictable trade policies will further keep the gold prices range-bound. However, lower interest rates and a dovish policy stance could continue to attract investments in gold.

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