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Home >Markets >Commodities >Gold prices up 40% in a year. Analysts' next target: 50,000 by year-end

From last year's Akshaya Tritiya to this years's Akshaya Tritiya, gold prices are up about 40% in a span of one year. And still analysts remain bullish on the yellow metal with some of them forecasting price prices to rise to about 50,000 per 10 gram by the end of this year, from the current level of about 46,500.

Nish Bhatt, founder and CEO of investment consulting firm Millwood Kane International, said: “Value of the yellow metal has risen over 40% in the last year alone. Gold acts as a hedge against inflation, and historically its value has appreciated during uncertain times, war, pandemic, or an economic slowdown. Since Gold is an international commodity priced in US dollar, any depreciation in rupee will lead to a further rise in prices of gold. "

"During economic uncertainty, gold is generally a safe and profitable investment; therefore, the outlook for gold remains positive in the near term," he says.

Across the world, the investment demand for gold has been on a upswing as a hedge against a deeper global recession and meltdown in some asset classes like oil.

“Gold re-establishes itself as a critical barometer for uncertainty in the economy. All major central banks have embarked on a “once in a lifetime" monetary expansion policy that will radically increase the money supply. Covid 19 has resulted in Implied volatility at historical highs. Real yields are a strong driver of gold prices, now in negative territory. Inflows into Gold ETFs as well as asset managers are increasing their long-term gold allocations," says Shekhar Bhandari, Senior Executive Vice President & Business Head – Global Transaction Banking & Precious Metals Kotak Mahindra Bank Limited.

"Price outlook on gold continues to remain positive with gold prices expected to rise significantly to meet the investor demand as a safe haven asset and due to depreciation of the rupee. We can expect gold prices to continue the rally, to settle above 5,000 a gram by the end of this financial year, primarily driven by the CoVid 19 crisis and its significant impact on the global economy."

Pankaj Bobade, Head of fundamental research at Axis Securities, said: "With the COVID-19 pandemic bringing the world economy to a standstill and a possible contraction ahead, gold seems an attractive option. Moreover, as the Central Banks of developed nations have been on easing spree to fight the economic contraction, the fiat currencies are expected to face pressure in the near future. In such a scenario, gold is likely to emerge as a safe-haven asset. Gold would be a good option from a long-term perspective."

Over the past one year, the coronavirus crisis, uncertainties like trade war between US and China, geo political tensions, dovish central bank actions have led led to many investors increasing bets for gold.

Navneet Damani, VP – Commodities Research, Motilal Oswal Financial Services, says" "Since we have seen such a good run up and liquidation in other assets classed, there could be bouts of correction in the near term. But the medium term picture still looks very promising and expect gold on the Comex to above $2000 and domestic gold prices could target upwards of 52,000 over the next 12 months. The attached charts will help you get a technical perspective on how gold could move on the domestic market over the next 12 months."

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