By Abnish Kumar Sudhanshu
Gold prices have rallied from Rs 25,070 per 10 gram on January 1, 2016 to Rs 31,650 per 10 gram (11th August), almost gaining 26 per cent just in seven months on a year-to-date basis till August 11. This stupendous rally in gold price was on account of global uncertainties. As we know, the gold caught in the upper circuit at the event of Brexit where the United Kingdom’s historic vote to leave the European Union sent investors scrambling for a safer place to park their money. Additionally, upcoming US election have also played their part in driving demand for Exchange traded funds were the main drivers of investment in gold over the half.
Where is Gold price heading: In the beginning of year, it was traded at 25,070 with the volume of 1985 lots, however as on August 11, it’s being traded at close to 31,650 with the volume of 14,752 lots, with the large jump in volume. There are multiple drivers which are driving this rally so far.
We believe the gold price to touch Rs 35,000 per 10 gram by the year end on the back of negative interest rate policies in Japan and Europe along with expectations of a slowdown in the cycle of US rate hikes, underpinned investors’ gold-positive sentiment. Additionally, India being the second largest consumer of gold is likely to see pickup in demand following recovery in Indian economy, disbursement of seventh pay commission along with better than expected rains so far. Above facts are likely to increase the disposable income in the hand of consumers which in turn drive the further rally in gold demand as well as price.