Safe bet: Five reasons that will lead gold to all-time high price

Indian households supposedly hold 25,000 tonnes of gold valued at Rs.121.5 trillion, or almost 60 per cent of India's GDP.

Gold price hit $1800 in New York's Comex Futures and appear headed for an all-time high level of $1900 in the international market, lifted by investors seeking a safe bet as the world battles coronavirus pandemic .

In India, prices calculated with 3 per cent Goods and Service Tax (GST) crossed Rs. 50,000 per 10-gram mark. Silver in Futures on MCX is trading at Rs 50,300 (without GST). In 2011, gold reached above $1900 and then fell sharply to consolidate at lower levels for years after falling to near $1,000. Gold usually has a price cycle of 8-10 years and after consolidating for years it has entered a bull cycle.

“Gold continues to have plenty of upside from current levels. We expect prices to come close to the 2011 peak of $1,921, although that level may not be breached this year," said Metal Focus, a London-based bullion and metal research firm.

"This may not to be a straight line rally and there will be periods of liquidations which will potentially take it to levels as low as $1,600. Investors should buy at such. That will make such dips short lived. Overall, we forecast the gold price will average $1,700 in 2020, up 22% year-on-year,” said Metal Focus.

Gold averaged $1,647 per ounce in 2020. The price rally this year has made Indian investors holding gold for the last 12 months richer by Rs 36.5 trillion. In the last 12 months, gold price in India has increased by 43 per cent to trade in the physical market at around Rs 48,600 per 10 gram. Indian households supposedly hold 25,000 tonnes of gold valued at Rs.121.5 trillion, or almost 60 per cent of India’s GDP.

Asian shares slump; gold, oil soar after Iran missile strike on US forces

US crude soared 4.42% to $65.47 a barrel.

Asian shares and US treasury yields plunged on Wednesday, while gold and oil shot higher after Iran fired rockets at an Iraqi airbase that hosts US military forces, stoking fears of further sharp escalations in a developing conflict.

Iran's missile attacks on the Ain Al-Asad air base and another in Erbil, Iraq, early Wednesday came hours after the funeral of an Iranian commander whose killing in a US drone strike has raised fears of a wider war in the Middle East.

In morning trade, MSCI's broadest index of Asia-Pacific shares outside Japan shed 0.5%. Japan's Nikkei dropped 2.5% and Australian shares fell 1%.

US crude soared 4.42% to $65.47 a barrel.

"We've moved on from how Iran will respond to now anticipating the U.S. 52-pronged response as the U.S. military forces in the region are in a heightened state of alert while likely preparing for war," said Stephen Innes, strategist at AxiTrader. "It's not going to be pretty today"

The sharp sell-off in risk assets was accompanied by steep drops in U.S. Treasury yields as investors flocked to safety. Benchmark 10-year Treasury notes yielded 1.7188%, down more than 10 basis points from a U.S. close of 1.825% on Tuesday.

The two-year yield dropped to 1.4581% compared with a U.S. close of 1.546%. The dollar also plunged against the yen, with the Japanese currency touching its strongest point against the greenback since October. The U.S. currency was last down 0.69% against the yen at 107.67 .

The euro gained 0.1% on the day to $1.1161

The flight to safety and a falling dollar supported gold, which rocked 1.91% higher on the spot market to $1,603.93 per ounce.

Business Standard