In the international market, spot gold prices touched $2,233.48 per troy ounce on Friday. The recent spike has reasserted its value as a high yielding asset-class.Gold breached the Rs 35,000-mark for the first time in the Ahmedabad market on June 22, 2019, when it settled at Rs 35,035. This means that in four years, nine months and seven days, gold prices have risen by 101.2%.
Haresh Acharya, director of the India Bullion, and Jewellers’ Association (IBJA), said, “The latest reading of US inflation data was very much in line with expectations. According to the report released by the US commerce department on Friday, the personal consumption expenditures (PCE) inflation measure climbed by 2.5% in Feb compared to a year ago, pushed by higher fuel prices.”
“Central banks are increasing gold holdings significantly, contributing to the upsurge. This and geopolitical tensions coupled with the anticipated rate cuts of 75 basis points signalled by the US Federal Reserve, have fuelled the rally in gold,” Acharya said.
In the last year, i.e. since March 29, 2023, when the price was Rs 61,000 per 10g, gold has yielded handsome 15.5% returns.
Safe-haven investments in gold have increased as it is considered a hedge against inflation.
Back home, high prices have left jewellery stores and bullion traders’ offices deserted as demand has nose-dived.
“Gold prices have increased by Rs 5,000 in 2024 itself, from Rs 65,500 on Jan 1. The sharp rise and the end of the wedding season have dampened retail gold purchases. Jewellery orders are few and most purchases involve recycling of old gold,” said Hemant Choksi, member of the Manek Chowk Choski Mahajan.
Analysts say gold prices will hold Rs 70k and rise further upwards given the global economic and geopolitical scenario.
“Evaluating the current scenario, it looks like gold will surpass the levels of $2,300 per troy ounce in the international market in 2024 itself, given the pace of its rally,” said Acharya.
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