Gold, which lost some of its luster to some extent in the second half of 2021, is expected to regain its luster in the new year and break through the level of 55,000 rupees per 10 grams amid pandemic woes, worries of inflation and the strengthening of the US dollar.
After a meteoric rise in 2020 when the yellow metal hit a record high of Rs 56,200 on the MCX in August, prices now hover around Rs 48,000 for 10 grams. That’s around 14% lower than historic highs and 4% lower from January 2021 levels.
All told, the current level is still 3 percent above all international prices, in large part due to the weakening rupee. CommTrendz co-founder and CEO Gnanasekar Thiagarajan said the reason for this year’s underperformance was the rush for liquidity in the stock markets.
“Meanwhile, the possibility of more COVID restrictions being imposed for the Christmas and New Year holidays loomed in several European countries as the Omicron variant spread rapidly. US health officials have urged Americans to get vaccinated, wear masks and be careful if they are traveling during winter vacation, ”Thiagarajan said.
According to him, the tightening of rates would make the US dollar more attractive against currencies linked to relatively looser monetary policies such as the euro and the yen.
Spot gold was above $ 1,791 an ounce in the international market, while in India MCX gold futures were at Rs 47,740 per 10 grams on December 29.
Gold prices are expected to continue to rise over the medium term amid inflationary concerns and uncertainty over the Omicron variant of the coronavirus.
“Falling stock markets and gold’s inflation hedge status should keep it well supported on the downside. Meanwhile, if geopolitical tensions were to erupt, it could spur sentiment again.
“We expect prices to move in a range of $ 1,700 to $ 1,900 per ounce in the first half of 2022 and cross over $ 2,000 in the second half of the year. In domestic markets, we can expect prices to be between Rs 45,000-50,000 and to exceed Rs 55,000 in the second half of 2022 for MCX, ”Thiagarajan said.
Senior HDFC (commodities) analyst Tapan Patel said inflation in the United States and the development of real bond yields could still cause some triggers for the gold rally.
Gold’s short-term resistance stands at $ 1,833 and $ 1,870 with support at $ 1,670 an ounce, he said, adding that for the long-term trend, $ 1,970 is expected. be the key resistance for 2022, with support at USD 1,580 per ounce.
“MCX gold futures have short term resistance at Rs 49,200 and support at Rs 45,000 for next year, we can see a capped rise at Rs 51,800 and support at Rs 42,500 “, he noted.
World Gold Council, India Regional CEO Somasundaram PR said that the introduction of the regulatory framework for the International Bullion Exchange and a framework for domestic trade underpinned by the creation of a new security brand “Electronic Gold Receipt ”would be potentially transformative over the next few years. .
On the other hand, the introduction of compulsory punching in 256 districts and a swing in single identity punching threatened to create business disruption. However, skillful management on the part of policy makers ensured its successful implementation, he stressed.
The government had made hallmarking, a quality certification, mandatory as of June 23, 2021, for jewelry and objects made of 14, 18 and 22 karat gold in 256 districts of the country, where there is at least one dosing and processing center. punching (AHC). To date, 1.27 lakh of jewelers have registered with BIS to sell hallmarked jewelry. Somasundaram said the move ended two decades of trade ambivalence and political uncertainty and was a remarkable achievement.
“In the coming months, soaring commodity prices and logistics costs should put further pressure on and the RBI has already adjusted its inflation expectations upwards.
“Rising inflation tends to stimulate demand for gold. Gold is seen as a strong hedge against inflation and decades of data support this assumption, ”he noted.
Motilal Oswal Vice President of Financial Services? Commodities Research Navneet Damani said gold prices could remain supported at lower levels after China reported its largest daily increase in local COVID cases in 21 months.
“The wider range on COMEX could be between 1,780 and 1,825 USD and domestically, prices could oscillate between 48,000 and 48,385 Rs,” he added. However, Stockal co-founder and co-CEO Vinay Bharatwaj said the rate hike is expected to cap the gold’s gains as they increase the opportunity cost of holding gold.
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