CHENNAI: Ahead of the wedding season, gold prices surged for the sixth straight day on Friday, soaring by `95 to trade over a 5-month high of `27,670 per 10 grams on positive global cues and wedding season demand. This is the longest winning streak for the yellow metal this year so far.
Globally too, gold gained more than 3 per cent so far this week and is on course for its biggest increase since early January. A shaky global economy has lifted buying interest in gold, making it among the best performing assets with a year-to-date gain of nearly 9 per cent. Spot gold stood at $1,157.20 on Thursday, its highest since October, 29.
“Gold is an inflation hedge and hence the desire to hold gold will be subdued,” said Amit Rathi, MD, Anand Rathi Financial Services. But, gold and other correlated commodities have not been giving positive returns since past three years and 2016 should not be expected to be any different, say analysts. In fact, spot gold ended with (-6) per cent return in 2015 and about (-)8.5 per cent CAGR for 2013-15.
“The dollar is at its strongest in 10 years and is getting stronger as the rest of the world currencies are turning weak. The US Fed has moved towards tight monetary policy after almost 9 years and there is a high chance that it will continue to hike rates in 2016. This would lead to a rise in demand for dollar and pressure on prices of correlated commodities such as bullion, oil,copper,” said Rathi.