Year Ender 2020: Know How Gold’s Appearance Was This Year
Year Ender 2020: Know how Gold’s appearance was this year, will investors be making big profits next year as well.
The year 2020 has proved to be a bumper year for gold prices. Bumper year because the year was full of encouraging conditions for gold prices.
Whenever there is geopolitical instability or there is uncertainty in the global economy, gold becomes the preferred investment option of investors in the form of safe-haven assets and consequently prices rise.
Let us know what has been the condition of gold in the year 2020 and what can be changed in the next year.
Gold has given 27 percent returns in this year so far
Gold has been the best performing asset for investors this year. So far in the year 2020, gold has given 23% return on Comex. At the same time, 27 percent has been given on MCX.
Earlier in 2019, due to aggressive stance of US-China trade war and US Fed, gold prices had recorded a jump of about 10 percent.
After this, due to the outbreak of Corona virus epidemic, and the possibility of recession due to the lockdown, the purchase of gold continued in the year 2020 and the prices kept rising.
Gold gets additional support in India due to fall in rupee
Gold prices are currently trading at around $ 1860 an ounce on Comex. The development of the vaccine and the end of the US presidential election have reduced market uncertainty.
This is why gold prices have come down from their peak of $ 2075 per ounce in August 2020.
At the same time, gold prices on MCX are also trading around Rs 49700 per 10 gram, after touching a high of Rs 56000 per 10 grams in August.
HDFC Securities Senior Analyst (Commodities) Tapan Patel said that the fall in the Indian rupee against the dollar this year has given additional support to gold prices in India.
He said that the Indian rupee has depreciated nearly three percent against the dollar so far this year.
Gold will remain fast for the next two years
Patel pointed out that the balance sheet expansion coupled with announcements of easy monetary policies of major central banks .
More stimulus packages has led to continued support for gold prices to trade at high levels in the medium to long term.
He reported that the US Fed’s balance sheet reached $ 7.22 trillion in December, compared to $ 4.3 trillion in March,.
While many further stimulus packages are to come, which will lead to a strong jump in gold prices for the next two years.
This situation was observed even when the Fed’s balance sheet expanded rapidly in 2008-09.
Patel said that we will see a rise in gold prices next year as well. Due to concerns about global economic recovery, gold on Comex could go up from $ 2150 to $ 2390 an ounce next year.
At the same time, the price of gold on MCX can go from 57,000 to 63,000 per 10 grams.
The slow pace and high amount of relief measures to revive economic activities and labor market development will continue to be the main reasons for continuing the surge in gold prices.
Continue investing in gold
Tapan Patel of HDFC Securities has advised to continue investing in gold. He says that we should continue to invest when there is a decline.
He said that investors can go for investment at the level of $ 1520 per aus and Rs 41,000 per 10 grams.
He said, “Investors should understand that gold does not give regular returns year after year, but lumpsum returns every 3 to 5 years.
The main objective of investing in gold is hedging against inflation and currency. Investors can invest in gold in the form of Gold ETFs, Digital Gold, Sovereign Gold Bonds, etc. instead of Physical Gold.
This is why gold will continue to boom
There are many factors, due to which gold will continue to rise further.
Ajay Kedia, managing director and research head of Kedia Advisory, said that during the recession in 2008, there was a five-year period of gold boom between 2007 and 2011.
He said that this time also should be so. He said, “Gold prices will pick up in the coming years due to lower interest rates.
Relief packages in various economies, rising inflation, increase in unemployment, and slow recovery in economic activity.”
Kedia said that prices of major base metals have gone up by 50 to 70 percent in the last five-six months.
This has made raw material expensive for industries, which is having an impact on economic activities.
