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Why gold rates are increasing fast ?
Posted on: 08/Aug/2019 6:23:06 PM
It seems that the bull market in gold has begun after a pause. Indian gold prices have hit an all-time high. There are several reasons for this, the main being the fluctuating international economy.
MCX Spot gold price is 25 per cent higher over prices at the same time last year.
The reasons:
- Escalating trade tensions between the US and China
- The Fed rate cut
- Drop in rupee vis-à-vis the US dollar are reasons for the yellow metal seeing a strong rally (at $1484/ounce now)
- IMF too has recently downgraded its global growth outlook for 2019 to 3.2 per cent from 3.3 per cent predicted in April.
- Fed rate cut, sell-off in equities and central bank buying help the yellow metal rally
- Down-trend in the stock market globally
Outlook
Gold prices have delivered a return of 15 per cent in rupee terms (14 per cent in dollar terms). If global trade tensions continue in the months to come, there is room for solid gains on the metal even from here. Target $1500 is the closest and looks achievable even on technical charts.
Global gold prices are still way below the 2013 peak of $1696/ounce. Though Fed Chairman Jerome Powell suggested that a series of rate cuts may not happen, Trump’s action against China in the last few days are suggesting that more rate cuts from the Fed can’t be ruled out. And, if this turns true, investment demand for gold may fill the vacant space of consumption
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