Earlier this week, yellow metal gold rallied ₹1,400 to cross ₹60,000/10 gram for the first time ever. The turmoil caused by the liquidity crisis in 2 major US banks – Silicon Valley Bank and Signature Bank – as well as in the Swiss banking giant Credit Suisse put bullion on track for its biggest weekly rise in three years.
Going ahead, experts expect the volatility in the equity markets as well as the banking crisis to continue to support gold strongly. They advise investors to keep strong allocation in the yellow metal.
Experts see gold trading above 60,000 in the current calendar year.
The yellow metal was at ₹59,350 per 10 grams in the national capital on Thursday.
"Gold prices have been given strong returns since 2019. Prices were at ₹31,000 per 10 grams which have now touched ₹60,000, giving nearly 100 percent returns in the last 4 years which accounts for the compounding of 25 percent which is far beyond par levels of 15 percent in major asset classes," noted Jateen Trivedi, VP Research analyst at LKP Securities.
Further, major volatile events like trade war since 2019, COVID-19, Russia Ukraine war, etc. have also led to gold prices surging since 2019.
"Currently we are in financial banking crises after SVB Credit Suisse alike which will continue to support Gold strongly this year in 2023. Investors should definitely keep a strong allocation to Gold," advised Trivedi.
He also pointed out that the 25 basis point rate hike by Fed will also be strongly positive for gold and levels of ₹61,500 will be seen in the coming days, he predicted.
Meanwhile, Colin Shah, MD, Kama Jewelry, said that gold prices hitting a fresh high is a sign of slower economic growth and lower interest rates with ample liquidity to help the system steer of the current situation.
“Gold prices have risen almost 7-8 percent in the past month. The rally in the yellow metal is primarily due to the banking crisis in the west. The liquidity infused by the central banks and the expectations of lower to no rate hikes is pushing gold prices up. Gold is a safe haven, historically it has gained in periods of uncertainty. The current situation globally may take some time to clear out. Globally, central banks have been adding gold reserves. The onset of the festive season in India starting from Gudi Padva will also support demand at the retail level," stated Shah.
Shah expects gold to gain further and touch new highs in the next few months. Domestically, it is expected to trade in the range of ₹61,000-62,000 per 10 grams. Internationally, it may scale levels of $2,050-2100/oz, he estimated.
Finally, Navneet Damani, Senior VP – of Commodity Research at Motilal Oswal Financial Services, said the broader trend is positive for the yellow metal. He expects COMEX gold to be in the range of $1985- 2015 while on the domestic front prices could hover in the range of ₹59,800–60,600, he said.
“Bullions continue to surge, with gold on the domestic front hitting a new lifetime high of over Rs. 60,000, as a wave of banking crises shook global markets and put bullion on track for its biggest weekly rise in three years, while bets solidified for a less aggressive Fed in its fight against inflation. The collapse of Silicon Valley Bank in the U.S. has highlighted banks' vulnerabilities to sharply higher rates, while a rout in Credit Suisse shares has added to the market turmoil," explained Damani.