While we have seen a correction in gold price both globally as well as in the domestic factors, the rally in the yellow metal will again stage a comeback. It is to be noted that gold price is influenced more by international factors then from domestic cues.
In Friday's trade, gold in the home market dropped again as rupee in late hours gained momentum against the dollar which had shown a resilience and touched an over 3-month high. The gains in rupee were primarily led by oil's fall in the global market by as much as 1%.
Analysts estimate gold one-year price targets at Rs. 44,000 per 10 gm, while its 2-year price is Rs. 50,000 per 10 gm.
And the lull in the market infused after the sentiment in gold has been hit due to announcement of corporate tax which lifted the Sensex by a staggering 8% since the Friday's session also instilled gains in the home currency, which impacted gold prices on the adverse side.
Nonetheless, even as the US announced that the long prolonged US-China trade deal would be reached soon; its fate sitll hangs, also the recent impeachment enquiry against the US President Donald Trump for his alleged abuse of his power in office have again worsened geo-political outlook which bodes well for the precious yellow metal.
While, gold has retreated lower from the highs of Rs. 40000 to Rs. 37,250 per 10 gm in the local markets, in the international market too gold has remained static near the $1500 mark per ounce.
Also, gold shall be supported in price by economic growth concerns which are unlikely to fade in near term. The increase in holding of the precious metal by major central banks and their nudge to promote economic strength by way of infusing more liquidity through ease in monetary policy makes gold more competitive.
"Slowdown in global growth I putting pressure on central banks to go for easier monetary policy stance. This is leading to more liquidity in the market which is bringing down the rate of interest and currencies are depreciating. All these are resulting into higher demand for safe haven like gold", said Narne of Motilal Oswal.