Gold Prices To Hit Rs 50,000, Followed By Rs 56,500

Gold prices are expected to immediately target Rs 50,000, followed by 56,500 and above over 12-15 months, Motilal Oswal Financial Services has said. According to the firm, gold's volatility in CY2021 until now has been no less than any ride in an amusement park.

"After a good rally last year, we witnessed some profit booking and consolidation at lower levels amidst the US Presidential election uncertainty, vaccine reports from various pharma companies and volatility in dollar and yields. This led to some profit booking in ETFs and CFTC positions suggesting that speculators too unwinded their positions hence affecting the overall sentiment. Although, with all these uncertainties, precious metal pack were backed by strong fundamentals which kept the hopes high for all bulls," Motilal Oswal Financial Services has said

"While we talk about the pandemic and bullions fundamentals, it is hard to forget the supply and demand dynamics that have been changing due to the measures the government announced in these times. The year 2020 started with prices at peak as there was ample demand and not sufficient supply. Physical market was hit, amidst the pandemic, stores were shut and market participants could not go out and buy or recycle their gold. On other hand, with less gold recycling and mines taking a hit, overall supply was in question," it has noted.

"In 2021, pandemic struck again and a lot of economies announced stricter restrictions that led to safe haven buying in the precious metal pack. COVID cases are still on the rise in India and pandemic fears still hovers the market, but the situation is a bit different from last year. A complete lockdown is not yet announced pan India, there are a few restrictions, but the demand supply dynamics are different from the previous year.

Also, import duty cut was declared earlier this year in the Union Budget announced by the GOI, which also weighed on the prices and encouraged jewelers to import more. The effect of the same can already be seen as the March import number was reported at 160T which is almost ~470% higher than the previous year. Strong fundamentals is helping gold gain momentum and is justifying our bullish stance that we have been maintaining for more than a year," Motilal Oswal Financial Services has said.

"As we talk about demand supply dynamics & festive season, Akshaya tritiya aka Akha Teej, an annual spring time festival of the Hindus and Jain is approaching this week. Gold's demand increases more during these festivals and looking at the import numbers, same is expected this time too. Yes, there is definitely a concern of restrictions that are re-imposed in almost all parts of the country although the lockdown situation is better as compared to last time. Also, with physical gold there are many platforms like Online gold (Me-gold), ETF's, and others which market participants can select depending on their risk," the report notes.