Gold - Shekhar Bhandari - Kotak Mahindra Bank

Shekhar Bhandari, President - Global Transaction Banking, Kotak Mahindra Bank Limited on Gold.

"Gold re-establishes itself as a critical barometer for uncertainty in the economy. All major central banks have embarked on a "once in a lifetime" monetary expansion policy that will radically increase the money supply. Covid 19 has resulted in Implied volatility at historical highs. Real yields are a strong driver of gold prices, now in negative territory. Inflows into Gold ETFs as well as asset managers are increasing their long-term gold allocations. In dollar terms gold is up +14% YTD and +34% over last 12 months. In rupee terms it is + 43% over Akshay Tritya 2019.

Akshay Tritiya 2020 looks subdued due to the continued lockdown on the back of the Coronavirus crisis. The inventory on hand for the jewellers as well as the gold jewellery held by households in India have seen significant appreciation in value. Prices in April last year around Rs 3200/3300 a gram and currently around Rs 4600 levels have resulted in an increase in the wealth by 43% year on year for those who have invested, purchased or diversified in gold. Domestic jewellery demand has seen a significant drop given the rise in prices through the last financial year. The biggest impact to hit demand (incl Exports) has been the CoVid 19 crisis.

Price outlook on gold continues to remain positive with gold prices expected to rise significantly to meet the investor demand as a safe haven asset and due to depreciation of the rupee. We can expect gold prices to continue the rally, to settle above Rs 5000 a gram by the end of this financial year, primarily driven by the CoVid 19 crisis and its significant impact on the global economy."

Source : Equity Bulls

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