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Where Are Gold Prices Headed Post Akshaya Tritiya?

Commodity experts appear to be bullish on gold over the medium term with price forecast of $1400 an ounce.

Gold buying is set to pick up pace on the occasion of Akshaya Tritiya on Friday. Those buying the yellow metal for investment purposes may be wondering where gold prices could be headed in the near future. Would the purchase yield good returns?

Commodity experts appear to be bullish on the yellow metal over the medium term. Anand James, Chief Market Strategist at Geojit Financial Services, says gold could touch $1400. “After registering annual losses on consecutive years, gold looks to have turned a corner and looks to be aiming $1400 per troy ounce. With inflation soft in most emerging markets as well as developed economies, and equity markets surging everywhere, Gold’s appeal now stems more from a safe haven point of view rather than an investment point of view,” James told Moneycontrol.

Aasif Hirani, Director, Tradebulls, is bullish on the medium term, though he says the short-term outlook is negative. “For medium term, we are bullish on gold considering the rising political uncertainty, low expectation of US interest rate hike this year and rising bond yields. However, in the near term, trend for gold is bearish. If we look at the technical chart, MCX Gold has failed to cross its 200-day moving average twice this year.  Near term support for gold comes at 28500-28600 which was the support seen earlier in this month. A strong rupee is also creating a headwind for the gold.

Gold closed at $1263.80 an ounce in global markets on Wednesday. It has given returns of around 6 per cent during the current year. On the domestic market, gold lost Rs 250 to close at a two-week low of Rs 29,350 per 10 grams on weak global cues and muted domestic demand for jewellery.

Ahammed MP, Chairman at Malabar Gold & Diamonds, advises investing in the yellow metal. “Gold could be good investment at this point. The gold price forecast for 2017 is positive, with analysts’ predictions of $1,400 by year-end,” he said.

Tradebulls’ Hirani says that near-term triggers that can drive gold prices are geo-political uncertainties. “Gold prices eased in the wake of French election result last weekend.  Near term gold prices may also come under pressure on a potential rally in real interest rates following the expected unveiling of President Donald Trump’s tax policies but we don’t see too much of correction going forward as we expect US dollar to weaken further. 10 year US Treasury yield is declining while inflation is rising which is fertile ground for precious metals to gain in price,” he said.

Anand James of Geojit says geopolitical tensions will have a bearing on the metal. “While geopolitical tension and equity performance provides the major triggers, Rupee has the potential to be a wild card. Relaxation of Dodd Frank Act in US (on financial regulations) could also pave way for more money chasing these assets,” he said.

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