MUMBAI: Amidst global trade worries and expectations of rate cuts from the US Federal Reserve, gold prices have been given a fillip in the international and domestic markets.
Flight to gold as an alternative investment is at work again, and in the domestic market demand from jewellers have seen prices rally sharply. On Tuesday, domestic prices saw a jump of Rs 200 per 10 gram to Rs 34,470, and on MCX, the October futures crossed the Rs 35,000 mark.
Geopolitical tensions, especially those emanating from the US-Iran, have acted as a further trigger to the rally. Vibha Sarin, COO- Retail Operations, MMTC-PAMP said, “Primarily gold prices have surged because of tensions in the Gulf, but also the trade wars have had an impact on bullion prices. Investors are looking for safe havens.”
Falling interest rates as always have also made investors go looking for gold which hasn’t seen a big rally in the global markets for a while. Commenting on the international spot price of $1,419.15 per ounce, Gajendra Prabu, analyst at HDFC Securities commented that the “big anticipated move has begun” technically.
“Recently, the price has breached the neckline of the pattern i.e. closed above 1,360. This indicates it is heading towards the targets of 1,480 and 1,590 which are key retracement levels of the previous major falling leg from its lifetime high to 1045 levels,” Prabu said.
The overall anticipation has been that the gold rally can move up to $1,700. Reports show that central banks globally have also been building on their gold reserves. The RBI had last year added 42 tonnes to its reserves and, with additional purchases this year, its reserves are at a record high of 618 tonnes “with potential to buy more”, Motilal Oswal Investment Services said.
Gold is currently catching up after underperforming other classes over the past 3-4 years and could push toward Rs 36,000 by the year-end, said Kishore Narne, Head of Commodities & Currencies, MOFSL.