Gold may hit $ 1750/oz by the year-end
Gold prices are now at around all-time high at both domestic and international levels, but physical demand on the occasion of Akshaya Tritiya festival is unlikely to be affected as markets will get used to the new price as was the case last year and the year before.
India, world`s largest consumer of the yellow metal, celebrates Akshaya Tritiya on Friday, when consumers buy gold to invoke prosperity.
In a special interview with Ajeet Kumar of ZeeBiz.com, T Gnanasekar, Director Comtrendz, shares his views on gold investment demand, price outlook and various other aspects.
Gold and silver prices are on a rampage. What are the reasons for this upsurge?
Weaker dollar, safe-haven buying, rising inflation and energy prices are mainly responsible for the current rally.
The current investment demand seems to be more speculative in nature. How sustainable is gold’s recent move beyond the USD 1500/oz and 23K level?
It is not a purely speculative move. The move has been supported by fundamentals. It has only moved high too fast. So, after a healthy correction, prices could continue to rise higher.
Do you see seasonality in prices of gold as demand appears to be firm, especially during the Apr-June quarter?
These are conventional factors. Whether demand from jewellery side remains good or not, investment demand for gold will remain robust irrespective of seasons.
Do you think gold future is a better investment product compared to physical gold and ETF products? How do the returns from gold futures compare with gold ETF products and physical gold?
If the roll-over cost is removed, then the returns will be almost the same.
Are there any signs of overheating or blow-out in gold’s current rally?
Definitely, there are signs that this rally is overdone and needs a healthy correction to sustain the long-term bullish trend.
What should an average investor do under current circumstances?
Stay invested in all major dips and support levels and if it is investment buying, please do so in physicals (National Spot Exchange) as much a s possible.
Wouldn’t high prices put pressure on demand especially during Akshaya Tritiya?
Markets will get used to price as was the case last year and the year before. So the high price wouldn’t put pressure on demand.
How have gold products performed over investment products such as stocks, mutual funds and real estates, during the last one year?
Precious metals have beaten all asset classes this year so far.
How much higher do you think the price of gold could go?
After the downward correction, it can resume the rally higher towards USD 1600 levels or even higher to USD 1750 levels by the year-end.