Gold likely to surge up to Rs 42,000 by December-end as geopolitical uncertainties, weak rupee push prices, say analysts

Spot gold prices are likely to bounce back while remaining above the critical support level of $1,458

Press Trust of India October 29, 2019 11:54:07 IST
Gold likely to surge up to Rs 42,000 by December-end as geopolitical uncertainties, weak rupee push prices, say analysts
  • Gold prices were at Rs 38,302 per 10 grams in MCX, while it was at $1,506 in Comex.

  • Investment demand which is the indicator of the safe-haven buying in the yellow metal has surged in the third quarter

  • As per the IMF. the global economy is projected to grow at 3.5 percent in 2019 and 3.6 percent in 2020, 0.2 and 0.1 percentage point below last October's projections

Mumbai: Geopolitical uncertainties, sustained Central bank buying and weak rupee against US dollar will keep gold under pressure and are likely to push the prices up to Rs 42,000 per 10 grams level by the end of this year, according to analysts.

"Geopolitical uncertainties emerging from the Middle East may continue to underpin gold prices going ahead to $ 1,650 an ounce in Comex markets and Rs 42,000 in MCX," Commtrendz Research co-founder and CEO Gnansekar Thiagarajan told PTI here.

The yellow metal is likely to continue to remain bullish till the end of the year mostly due to sustained Central bank buying, geopolitical uncertainties and possible year-end squaring of positions in equities boosting appeal for safe-haven gold, he added.

Gold prices were at Rs 38,302 per 10 grams in MCX, while it was at $1,506 in Comex.

Motilal Oswal Financial Services (MOFSL) VP-commodity Research, Navneet Damani said, this year has proved to be one of the best years for gold returns as prices have risen by 15
percent on the domestic front, getting some support from weakness in the rupee that has fallen by 1.4 percent against the dollar.

Gold likely to surge up to Rs 42000 by Decemberend as geopolitical uncertainties weak rupee push prices say analysts

Representational image. Reuters.

"We expect that positive momentum for gold could continue further, but the pace of rally could get measured as uncertainties related to trade war is taking back seat. This slowdown in major economies could push central banks to remain dovish for an extended period and that will support gold prices," he added.

The ease-off in the trade war could lead to some correction in prices, however, the prices remain bullish and expect to move higher to test previous highs of Rs 39,500 by the end of the year, he pointed out.

Kotak securities head of commodities Ravindra Rao said going forward gold is expected to average in a broad range of $1,460-1,530 in dollar and rupee terms average between Rs 36,800-39,400 on MCX.

Investment demand which is the indicator of the safe-haven buying in the yellow metal has surged in the third quarter, he said.

Although the optimism about US-China trade talks and a Brexit deal has prompted traders to book some profits the gold remained bullish as the ongoing trade concerns have already impacted the global economy as seen from the International Monetary Fund projections, he opined.

As per the IMF. the global economy is projected to grow at 3.5 percent in 2019 and 3.6 percent in 2020, 0.2 and 0.1 percentage point below last October's projections, he added.

Abans Group chairman Abhishek Bansal said geopolitical tensions flared in the Middle East after an attack on the Saudi Aramco oil facility on 14 September.

"Gold also found support after US lawmakers launched a formal impeachment inquiry on President Donald Trump on 24 September. All these developments created fresh uncertainty in the financial markets, which raised gold prices during the second and third week of September," he added.

The spot gold prices are likely to bounce back while remaining above the critical support level of $1,458, he said.

"Gold prices in India would remain firm as we expect the rupee to weaken further from current levels. The government's plan to boost economic activity through various tax sops could end up in higher fiscal deficit, thereby causing depreciation of the rupee," he added.

Updated Date:

also read

In Crazy Rich Asians, I found my only vacation during a raging pandemic
Entertainment

In Crazy Rich Asians, I found my only vacation during a raging pandemic

The setting of Crazy Rich Asians is inextricably tethered to its characters. Their material possessions — generational wealth, plump diamonds, rolling estates, gleaming luxury cars, and multi-million-dollar businesses — make them who they are. It's right there in the title!

After gold at Nationals, Reliance Foundation Odisha HPC athlete Amlan Borgohain eyes CWG, Asiad
Sports

After gold at Nationals, Reliance Foundation Odisha HPC athlete Amlan Borgohain eyes CWG, Asiad

Sprinter Amlan Borgohain won silver in the 100m, clocking a PB of 10.34s. In the 200m race, he again ran a personal best timing of 20.75 seconds to win gold.

Biggest challenge for an athlete is repeating a gold at the Olympics, says Neeraj Chopra
Sports

Biggest challenge for an athlete is repeating a gold at the Olympics, says Neeraj Chopra

“Yeh time hai aage badhne ka. I’ll now hang this gold at home and start preparing for the next season’s competitions and then the next Olympic Games,” said Neeraj Chopra.