Gold ends 2019 on shiny note; may hit Rs 45,000 per 10 gram in 2020

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Gold is set to remain more expensive in the New Year as continuing geopolitical tremors, economic woes and rupee volatility are expected to push the yellow metal even to Rs 45,000 for 10 gram, says a PTI report.

Thanks to various government policies and soaring stock market, gold witnessed periodic as well as steep price fluctuations in 2019, with bias towards the higher side in the second half of this year.

Data from the World Gold Council shows that 14 central banks, including the RBI, have reportedly added more than one tonne to their reserve.

In addition, the low level of interest rates worldwide will keep stock prices high and valuations at extreme levels, on the verge of peaking out. Gold demand will thus soar. From US-China trade turmoil to conflicts in the Middle East, geopolitical issues are weighing the minds of investors. Cues from the US presidential polls towards end of 2020 is also awaited.

The potential medium-term target lies at Rs 41,000-41,500 per 10 gram at MCX ($1,640-1,650). Further, the level could rise to Rs 44,500-45,000 ($1,795-1,800) in case there are new developments on the global front that could dent risk appetite.

World Gold Council Managing Director (India) Somasundaram P R said local currency prices in almost all markets, including rupee, breached previous life time highs, leading to muted consumer demand across markets.

“Indian demand also lost significant momentum in Q3, and though Q4 saw a revival with its traditional wedding and festival season, overall demand for the full year is expected to be at the lower end of 700-750 tonne. ETF (Exchange Traded Fund) demand in the US and Europe, and central bank buying across nations, however, continue to be strong,” he noted.

According to him, the Reserve Bank of India (RBI) was one of the main buyers of gold in 2019, increasing its reserves by over 60 tonne.

China and Russia have been the biggest buyers of gold till now. Besides, countries like India, Turkey, Poland and Kazakhstan have also joined the bandwagon in purchasing the yellow metal.

Shekhar Ghosh is consulting editor, Indoasiancommodities.com. He has edited and written for publications like Business India, Business Standard, Business Today, Outlook and many other international publications. He can be reached at shekhar.ghosh@indoasiancommodities.in.

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