By Riju Dave
The only thing that Indians probably love more than buying real estate is buying gold. So there's good news for investors as experts predict that the current gold rally in India is likely to continue till the end of the year, possibly beyond.
With gold prices reaching a high of Rs 32,336 per 10 g on 6 July 2016, this is the first time in four years that these have touched the Rs 32,000 peaks of 2012. In the past year alone, gold has risen 17.2% from Rs 26,450 on 4 July 2015 to Rs 31,000 on 5 July this year.
"Due to the current uncertainty in the global market, especially after Brexit, as well as the currency volatility, gold prices are likely to move up," says Naveen Mathur, Associate Director, Commodities and Currencies, Angel Broking. "While it may go up to US$1,400/oz, from the current $1,360 level, in the short term of 1-2 months, it can easily rise to $1,500 if the global volatility continues and the situation worsens," adds Mathur.
Agrees C.P. Krishnan, Whole Time Director, GeojitBSE 0.38 % Comtrade: "There may have been a slight correction, but the investing appetite has come back after Brexit and prices will move up. If the $1,400 level breaks internationally, then the price in India may go up to as much as Rs 34,000 per 10 g." Mathur is more optimistic, saying these could touch Rs 36,000 levels. "The situation in the UK is quite fluid and the uncertainty in the Eurozone is likely to continue for at least a year," says Mathur.
Gold prices saw a dip after 2012 and then again after 2014 when the US and European economies seemed to stabilise and the dollar gained strength. However, due to the recent developments involving Britain's exit from the European Union, investors have begun lapping up gold as the values of euro and pound sterling fell, the latter to a 31-year low overnight. "It's the safe haven demand and currency volatility that is seeing the current up and down movement of gold prices," says Mathur.