ASSOCHAM Says that Gold to Shine Further
The prices, at present are ruling at Rs 31,000-31,500 for 24 carat purity gold in major Indian cities, even as the festive demand seems to be picking up. “Going forward, the festive demand will get a further push from the wedding season, which is the main contributor to gold consumption in India. The upside in the short term of a few months is seen between Rs 1,500-2000 while the downside could be limited to Rs 1,000-2000 per ten grams, the paper said.
“The moot question among the buyers and analysts is whether scope for any further run is left when gold has seen so much of a rally, the best among all the assets classes – including quantitative easing led stock markets. Revival in Indian consumption, financial risks in the Chinese economy, tapering tantrums of the US Federal Reserve as also close American Presidential elections are all seen as the push factors for the gold to remain as a safe haven,” the ASSOCHAM Paper noted.
Reading the trends and watching the global developments, the chamber Secretary General Mr D S Rawat said,” gold is finding a strong support levels in the international markets and is expected to stay above USD 1200 mark, as a starting point for the next possible rally. All in all, given the state of play in equity, debt and properties, gold would stand out for quite some time”.
Yet another reason for the investors to seek refuge in gold by global markets is the prolonged phase of negative interest rates by a large number of central banks, which act as a big disincentive to the investing public to park their funds in banks which erode their wealth, rather than adding to the same.
“The outlook for the precious metal remains upbeat taking into consideration several factors including reduced pace of the US Fed rate hikes , increased adoption of negative interest rates most recently in Japan , increased inflows in gold ETFs(equity trade funds) and decline in gold production”.
Back home, along with the official channels, smuggling of gold has seen up tick due to continuation of high import duties. The industry has been demanding lowering of duties to encourage official imports.