Gold price rises 17 pct! Will rates keep skyrocketing or plunge from here | EXPLAINED
Gold price has been skyrocketing since COVID-19 pandemic outbreak and the precious yellow metal has scaled around 17 per cent in the first six months of 2020!
Gold price has been skyrocketing since COVID-19 pandemic outbreak and the precious yellow metal has scaled around 17 per cent in the first six months of 2020! Now, with reports of success regarding Covid 19 vaccines coming in - Moderna Biotech has claimed success today in trials with its first vaccine against coronavirus - investors would be wondering whether gold price will keep climbing or its role as safe haven has been compromised.
According to bullion experts, this rally in gold prices will continue in the next six months left in 2020 as well because reasons for rise in precious metal price like Coronavirus fear, stemming from changes happening to the original strain and new strains being found, uncertainty in equity and bond yields and weak global economic outlook will continue to support the metal.
Highlighting the returns gold has given in the first six months of 2020, Prathamesh Mallya, AVP - Non Agri Commodities and Currencies Research at Angel Broking said, “Gold had a remarkable performance in the first half of 2020 with around 17 per cent returns in the US Dollar terms and the COVID-19 Pandemic is having a devastating effect on the performance of the global economy. There is talk of V shaped recovery shifting towards U shaped recovery or even a W shaped recovery, if the pandemic causes destruction in the form of a second wave of infections. Whatever the scenario, one thing is for certain that the IMF is currently projecting a 4.9 per cent contraction in global growth which certainly is spoon feed for global investors to move towards safe haven."
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How much can gold price rise? Significantly, he said gold has the potential for further double digit performance in the second half of 2020.
Speaking on the reason why gold price will keep rising over the next six months, Prithviraj Kothari, National President at India Bullion and Jewellers Association (IBJA) said, "Gold price is rising because of the big investors pumping their surplus money into buying gold as equity and other investment options have been hit by the COVID-19 pandemic. Apart from this, the global economy is also feeling the heat of Coronavirus and to maintain liquidity into the markets, various central banks are printing their national currency that includes the US too. So, this has led to rise in inflation that is also supporting the gold price rally."
The IBJA National President went on to add that the landing price of gold can witness around Rs 55,000 per 10 gm by the end of 2020.
On his tip for investors, Kothari said that they should maintain buy on dips strategy while investing in gold.
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