Gold prices in India and the global bullion markets have been at record highs, as investors prefer safe-haven assets in the backdrop of economic uncertainty triggered by the Covid-19 pandemic. Somasundaram PR, managing director of the World Gold Council (India) noted that gold price topping Rs 50,000-mark is distinguished by a high and the response is naturally mixed happy investors and wary consumers.
Domestic prices are driven by a multi-factor interplay — low or negative interest rates, and uncertainty caused by trade conflicts and geopolitical tensions, he said.
Rupee-dollar exchange rates have led to domestic price rises, exacerbated by Covid-19 related disruptions and a general sense of insecurity, Somasundaram said adding volatility with an underlying bullish feeling is to be anticipated as disruptions and instability caused by the lockdown and fear-induced actions continue.
Covid-19 linked disturbances and global uncertainties, jewelry company PN Gadgil managing director and CEO Saurabh Gadgill said the gold price is likely to rise higher in the next 12 months following the US elections.
We expect gold in the domestic market to touch about Rs 65,000 per 10 grams in the next 12 months while reaching $2,500 an ounce on the international markets, “he said.
Is Falling consumer demand?
The jewelry industry expects the market for gold from the consumer to decline further in the face of rising prices of precious metal and economic slowdown.
“The market is still quite sluggish at the moment, with just 20-25 percent of industry following the economic downturn, work instability, social distancing, and Covid-19 lockdowns.”
The high price of gold will add to the already sluggish market demand, “said Anantha Padmanabhan, chairman of All India Gem and Jewellery Domestic Council.