Gold prices hit five years high on Thursday after the US Federal Reserve showed its readiness to cut interest rates and also because of geopolitical tension in the Middle East along with global economic growth concerns.
Gold prices hit a five-year high on Thursday after the US Federal Reserve showed its readiness to cut interest rates. The yellow metal rallied as much as 2.5% to $1,394.11 an ounce, the highest since September 2013, and traded at $1,380.18 in Singapore. Futures in New York gained as much as 3.6% to $1,397.70 an ounce, also the highest since 2013.
“The gold prices surged high on account of geopolitical tensions in the Middle East, uncertainty in financial markets, the trade war between US-China and the change in the stand of US Federal Reserve with respect to an interest rate cut. Considering these factors, we are bullish on gold prices for the next 8-10 months,” Kishore Narne, Head of Commodity & Currency, Motilal Oswal Financial Services told Financial Express Online.
The experts see a 30-35 per cent surge in the yellow metal prices amid global economic slowdown concerns. The trade war between the US and China is also supporting gold prices.
“Trade war will turn into a currency war and most of the countries will degrade their currencies which will lead to inflation. This time demand is weak, considering depreciating currency and low growth, we are bullish on gold. We have a target of Rs 36,000 per 10 gram by the year-end and close to Rs 40,000 per 10 gram for the year,” Narne further added.
Talking about domestic demand, Narne said jewellery demand is not really great in India. However, the investment demand will pick up because of the lower interest rates and uncertainty in equity markets. It may pick up by another 20-25 per cent this quarter. Currently, the gold is trading at Rs 33750 per ten gram. Rs 36000 per 10 gram is the upside we are looking at by this year-end.
“The gold prices surged high mainly because of the dovish stance by the US Federal Reserve along with geopolitical tensions in the Middle East. We have a target price of Rs 35,500 per ten gram for this year,” Jigar Trivedi, Fundamental Analyst – Commodities at Anand Rathi Securities Shares & Stock Brokers told Financial Express Online.