Can rising gold reach Rs 80,000 next year?
- The stock market crashed when the lockdown was felt but the luster of gold continued to rise
- Globally, declining interest rates have seen an increase in investment in gold
Indian stock markets crashed when the Corona virus caused a lockdown, but the luster of gold continued to rise. There are currently reports that the economic downturn caused by Corona will take time to recover. This suggests that gold prices will continue to rise in the future.
Why are gold prices rising?
According to Indian philosophy, gold does not make money but it helps in times of trouble. The whole world considers gold a good tool for safe investing.
Markets are going through uncertainty. Given Corona's growing case, no one can say when the economic recovery will take place. The Global Financial Institute and consulting firm are predicting a decline in the equity market.
When all the investment tools like stock market, bank FD, bonds show negative growth, experts advise investing in gold or gold bonds for safe investment.
Why did the price of gold go up?
Corona has caused a downturn in stock markets around the world. Against this, the international market has seen an increase in gold prices since May 2019. It has returned more than 44% in one year.
In the international market, gold has risen from 12 1250 an ounce to 18 1800 in one year. In India, gold has given a return of about 50% in a year. Gold in May 2019 to Rs. 32,000 per 10 grams which is now Rs. 49,000 has happened.
Which of the following is a good investment tool from the stock market and gold?
The Sensex (BSE-30) and BSE-500 have given annual returns of 9.05% and 8.5% respectively over the last 10 years. By December 2019, the Sensex had reached 40,000.Stock markets around the world collapsed after the Kovid-19 spread. Indian markets also fell 40% to 27,400 points by April 2020.
Stock markets around the world, including India, have been improving since April. In emerging markets, investors are seeing a positive outlook on new trends.
On the other hand, in 2008 gold was worth Rs. 8000 to Rs. 25,000 was done. By 2019, the price of gold had reached Rs 35,000 per ten grams, which is now close to Rs 50,000.
Is there a direct relationship between gold and interest rates?
There is a negative relationship between interest rates and gold prices. That is, if the interest rate goes up, the price of gold goes down and if the interest rate goes down, the price of gold goes up.
Central banks around the world have cut interest rates to combat the recession. Have announced a large economic package. The effect was that investors turned away from the banks. This was also the case during the 2008 recession.
According to consulting firm Deloitte Outlook, bond yields, crude rates and interest rates could fall further. It will have a serious impact on markets and banks and may lead to a rise in gold prices.
The Government of India has announced an incentive package of Rs 20 lakh crore for recovery in the economy. This will hurt the financial market and asset class bonds in the long run and it will boost gold.
Is gold worth Rs. 80 thousand can happen?
- "Gold prices will fall as the stock market rebounds," the Reserve Bank of India said in a monetary policy report. But amid the uncertainty of economic policy, gold prices will continue to rise.
- If you look at history, when risk assets like equity and real estate and bonds rise, gold prices are lower. This has been seen between 2011 and 2015 after the 2008 recession.
Analysts say that in the second half of 2021, investors will start investing in stocks, real estate and other risk assets. Somewhere after that, the economic recovery will pick up speed and gold prices will stabilize.
It is expected that by 2021, everyone will start getting the corona virus vaccine. Until then, economic uncertainty will continue. That means fast-moving gold could go up to Rs 80,000 next year.
Is it safe to invest in gold at current prices?
Interest rates in India have fallen sharply in the last one year. The downturn in the equity market has turned investors' attention to gold.
In such a scenario, the possibility of further reduction in small savings and term deposit rates cannot be ruled out if the RBI cuts interest rates further.
SBI currently offers 2.7% interest rate on savings bank deposits and 5.4% on 5-10 year term deposits.
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In such circumstances, investing in sovereign gold bonds is the best option. It will also have the benefit of 2.5% interest and capital gain. This will protect investors from any depreciation of the rupee.
Is gold likely to break even?
This suspicion cannot be denied right now. Researchers and analysts say a fall in gold prices is possible. But that doesn't seem to be the case at the moment.
If central banks sell gold to meet the economic crisis or if investors sell ETFs in case of losses in risky assets, gold could come under pressure and prices could fall.
