HYDERABAD: In 2019, gold price hit an all-time high. There has not been any significant upswing in gold prices in the last four years, until 2019, when prices suddenly rose by 28 per cent. The yellow metal remains one of the most trusted asset classes and interestingly, the one-year returns from gold exchange-traded funds too rose at about 14 per cent, in line with the increase in prices of physical gold.
But what does 2020 hold for gold prices?
Experts believe that the precious metal will face a volatile year ahead, thanks to the ongoing US-China trade talks, US Presidential elections and the Brexit outcome.
Globally, prices swung on weaker growth momentum, the trade war tensions and easing of monetary policies across economies. Incidentally, the equities hit a high in the US market and dollar continued to surge.
Analysts believe that geopolitical and economic risks will likely continue in 2020.
This will support gold prices, which is why they remain bullish on gold. For instance, both Goldman Sachs Group Inc and UBS Group AG see prices inching up to $1,600 an ounce, a level was last seen in 2013.
“The gold market will soon reach newer highs ideally in the next two-to-three years,” said Prithviraj Kothari, national president, India Bullion and Jewellers Association Ltd.
Kothari explained that economic slowdown, liquidity crisis and rupee depreciation are catalysts of the elevated prices of the yellow metal.
“Currently, gold prices are around Rs 39,000 and I am positive that in 2020, they will be in the range of Rs 38,000 on the downside and Rs 42,000 on the upside,” Kothari added.
Lower imports from India and China, reflecting weaker consumer demand, is also adding to the rising surge in gold prices.
In 2019, Indians’ appetite for gold was at its lowest since 2016, as prices touched a record high of Rs 39,885 per 10 grams in early September, partly owing to higher import taxes and global factors.
Though prices have retreated since then, they continue to remain high by over 20 per cent this year.