MUMBAI: After gold prices rallied to a six-month high in the international market, analysts are looking at a similar run in the price of the yellow metal here at home.
On Tuesday, gold on the New York Commodity Exchange rallied nearly 1% to trade at $2,028/Oz as the US government bond yield was showing a sliding trend and the dollar was also weakening against most major currencies.
In the domestic market, however, the price of the yellow metal didn’t go up as much and was trading in the range of Rs 61,100 to Rs 61,200/10gm – barely changed from the level it was at late last week. It’s now closing in to its all-time high level of Rs 61,500, recorded in mid-2023.
Gold has maintained its resilience amid global interest rate hikes, propelled by inflationary pressures post-Covid recovery, supported by central bank purchases, and heightened risk premiums due to geopolitical concerns, said Kishore Narne, director, commodities & currencies, Motilal Oswal Financial Services.
“With the US Federal Reserve nearing the end of policy tightening, markets are factoring in potential rate cuts in the upcoming year. We anticipate further upward momentum for gold, potentially surpassing the previous all-time high of $2,075 and reaching new heights, possibly around $2,200 by the close of 2024.”
Other than the international factors, the weakness of the rupee and the wedding season could help the rally in gold prices, market players said.
However, there is another view within the Indian jewellery industry, which believes that the rally in the international market could be limited in the coming months unless there is a major event that supports the price of this precious metal. “Since global investors are discounting the uncertainties, and inflation is also showing a sliding trend, I feel gold prices to hover in the $1,850-2,100 level,” said Colin Shah, founder & MD, Kama Jewelry.
Shah believes that since the two ongoing wars have failed to have any major impact on the price of crude oil and inflation is also coming under control, the price of gold may not rally further in the coming few months. “Unless there’s some major event that supports its price to rally,” he said.
There are also industry players who think that more than gold, the price of silver could rally since industrial demand for this precious metal would be an added factor for its price to move northward.
