Gold prices in India have not moved a great deal since the start of the season. In fact, gold prices are near the Rs 27,800 to Rs 28,300 (depending which city you are in) for the last few months. However, here are few reasons why investors can bet on gold at the moment.
As we all know, there is almost a threat of war, everyday by North Korea. Geo-political tensions on the Korea peninsula will keep gold prices elevated in the coming weeks. There are big reports of bombing that happened recently on Syria and all such events will ensure that gold prices do not fall anytime soon. This is why it is a safe haven asset and that is unlikely to change.
Rupee may weaken
There are worries that the rupee has gained far too much in the recent past. In fact, it has moved from levels of Rs 68 to Rs 64.55 and there is a high possibility that it may weaken. When that happens gold prices would gain and become even more costler than what it is today. This is because we import our gold requirements and pay in dollars. When rupee falls, gold prices in India gain.
In France, a far left candidate, who does not favour France in the Eurozone is surging in elections. Till the elections are complete the outcome is uncertain. So, for the next few weeks at least gold would be a good bet.
Uncertainty over policies
Uncertainty over policies in the US, may also have a telling impact on gold. Volatile policies will lead to volatility in gold prices, which could rally on the back of such uncertainty. We have already seen the impact of that particularly in the US, when the recent Healthcare Bill was pulled back.