Gold prices have rallied substantially in the last one year. It is the best asset class by a distance this year and given the macro-economic conditions and tensions between the US and China, Gold may see a further upside.
"Over the last few months we have been seen a sustain run up in gold giving over 25% returns for this year and taking the total gains for the last 2 year to over 45%, however given the current macro backdrop of we expect the momentum to continue with and could diver a handsome 30% returns targeting Rs.65000/10 gms over the next 18-24 months," says Mr. Navneet Damani, VP - Commodities Research, Motilal Oswal Financial Services
Silver too sees solid returns
Gold ETFs are seeing record inflows, as data from the World Gold Council shows. This has been supporting gold prices and the trend is unlikely to change. Silver too is seeing very good interest from investors.
"What gives us the confidence is the is the rapidly changing macros backdrop leading to lot of uncertainty, lower interest rates, negative falling bond yields, sustain liquidity push from many central banks and expanded fiscal balance sheets to minimise the impact of Covid-19 related slow down. While this looks like a perfect recipe for Gold, is now spilling over on its counterpart silver, which has seen a sudden surge in prices.
After being a laggard for the last few years, silver has seen massive buying interest. Surge in ishare holding, falling mine supply and high physical and industrial demand has been supportive for the prices. We believe that the metals has still some steam left and can add further gains towards Rs.64000 and also towards life time highs over Rs.74000 per kgs in the next couple of quarters," says Mr Damani.
US-China tensions push gold to record highs
Gold prices rose to an all-time high on Friday as investors rushed to take safety in the precious as U.S.-China tensions escalated and several countries around the world saw record Covid-19 infections.
August Futures Contract rose $1,898 per ounce, marking the sixth straight day of gains for the precious metal.
Many investors see gold moving towards that $2000 per ounce, as political tensions between US and China continue. Easy liquidity conditions, falling interest rates, rising covid-19 cases and escalating US-China tensions are a perfect recipe for a further upside for the precious metal. Investors who have the patience may reap decent returns in the coming days.