Outlook Positive On Gold For 12-18 Months Despite Choppiness

Even as the vaccine optimism dragged the precious yellow metal heavily in few weeks time and it was during the last week that a slight gain in prices was seen amid hopes of a quicker dole out of the US stimulus to tackle the fall-out due to the Covid 19.

Outlook Positive On Gold For 12-18 Months Despite Choppiness

Experts largely see the correction to be owing to technical factors and not being fundamentally driven. "The recent sell-off on gold is more on a technical front rather than fundamentals. Rollover of futures contracts from December to February in COMEX is the leading factor behind the fall. 40 million ounces of gold have been swapped from December to February", said Saha, Senior Analyst at Refinitiv on gold investments.

View on gold in terms of future price appreciation and store of value

Hitesh Jain, Lead Analyst, Institutional Equities, Yes Securities said, "Although optimism about impending vaccine rollouts has been reducing gold's attraction as a safe-haven of late, we see that the yellow metal will very much remain in the reckoning on a broader perspective. Given the fact that central banks have thrown the kitchen sink in terms of stimulating the economy, monetary debasement of the currency makes gold a very significant hedge against the policy failure of fiat currency."

"Needless to mention, ballooning sovereign fiscal deficit across the globe. Though Gold is a zero yielding instrument, the fact that around US$17 trillion of global bonds are fetching sub-zero yields. Ergo, gold as an asset class at the current juncture stands at a vantage point, both in terms of future price appreciation and store of value," Jain added.

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