Gold prices in India may rise 15% by year end to Rs 55,000/10 grams

Enhanced spending by the governments and central banks across the world is expected to render currencies weak but gold, which is seen as a hedge against inflation, even safer.

While in the international market, the yellew metal is expected to touch upto $3,000 for an ounce from $1,700 an ounce (approx Rs 1,28,000 per 28.34 grams) at present, India may not see more than Rs 55,000 for 10 grams by the end of 2020. (An ounce is equivalent to 28.34 grams).

The reason for India’s range bound gold prices is COVID-19 related loss of appetite for physical gold. Investment in gold, however, will see an upside due to turmoil in financial markets and a likely dip in mutual fund investments after Franklin Templeton shuttered six of its debt schemes.

Indians buy gold mostly for consumption purposes. Investment in gold started rising only from 2013, when the country started experimenting with digital gold.

A World Gold Council data too showed increased investment in gold last year. That is expected to go up further.

Bank of America analysts have projected that heightened stimulus by central banks amid coronavirus pandemic will drive gold to a record high by October 2021 to upto $3,000 per ounce.

“India will not see prices moving steeply upward due to behavioral change in people post COVID-19. Physical demand for gold will be subdued. Marriages and other rituals will not be that lavish until the economy starts looking up,” bullion analyst Ajay Kumar Kedia told DH from Mumbai.

He saw gold moving to Rs 55,000 per 10 gram by the year end and upto Rs 60,000 in the next 18 months from Rs 45,800 per 10 gram currently. This will give a boost to investment in gold.

According to the WGC report, more than two-thirds of investments made by women in India in 2019 went into gold. The precious metal accounted for half of the total investments made by men. Investment in jewellery remained the most favoured choice, followed by coins, vaulted gold, exchange traded funds (ETFs) and bars.

WGC, which surveyed about 2,300 men and women, aged between 18 and 65, both in rural and urban India, said a large number of Indians, who, though interested, have never invested in gold, as they are too scared because of the lack of trust in the product.