Gold outperformed equities with a 24% gain year-to-date. It increased by 18% last year, recovering from a 1.56% decline in 2018.
The yellow metal prices reached a record high at $2.075.47 per ounce in international markets. Investors purchased gold and sold risky assets such as stocks. Hence, in the domestic markets, gold was Rs 56,018 per 10 gram on August 7. Even before the pandemic, geopolitical issues, such as the U.S.-China trade war, low-interest rates, and ultra-loose monetary policy, had boosted gold prices.
Notably, the yellow metal is always considered a safe-haven for investment in uncertain times. We expect the precious metal to shine more. It might rise to Rs 63,000 per 10 grams in 2021 amid expectations of new stimulus measures and a weaker greenback.
In 2020, the economic and social difficulties caused by the COVID-19 epidemic turned the spotlight on gold as a safe-haven. The precious metal price hit an all-time high. At Multi Commodity Exchange, it was Rs 56,191 per 10 grams and $2,075 an ounce in August’s international market.
However, a sharp turn in global monetary policies led to a low-interest rate scenario. Hence the unprecedented liquidity lifted the yellow metal price in all major currencies. It made gold attractive to investors.
According to Gnanasekar Thiagarajan Commtrendz Risk Management Services CEO, the 2020 year started with gold at Rs 39,100 per 10 grams and $1,517 an ounce. The pandemic’s sudden reaction was short-lived as the domestic price reached a low of Rs 38,400, from where it steadily increased to Rs 56,191.
Gold’s outlook remains strong despite COVID-19 vaccine prospects
He announced the yellow metal outlook remains strong despite COVID-19 vaccine prospects and economic revival post coronavirus, mainly due to new stimulus expectations.
Gnanasekar Thiagarajan added that the greenback could weaken on the back of more stimulus. It could increase gold prices once again. He said that he sees inflationary expectations due to the massive stimulus as a positive factor that could attract investment buying once against 2021.
He considers that the physical demand for gold from India and China will take center stage in 2021. It has been weak for the past few years and could see a strong rebound. He also thinks prices to test Rs 60,000 or $2,200 at least in 2021.
Tapan Patel, the HDFC securities Senior commodity analyst, expects gold to remain bullish next year with targets of $2,150-$2,390 in COMEX gold and Rs 57,000 and Rs 63,000 at Multi Commodity exchange on concerns over global economic revival.