Spot price for gold rose 1.5% on Wednesday in India to touch Rs 40,977 for 10 gm, as markets woke up to retaliatory attack by Iran on US airbases in Iraq. In international markets, spot prices for gold hit a near seven-year high to touch $1,600/ounce before coming off.
In 2020, the precious metal is up 5% in rupee terms, as global prices surged and investors sought refuge in safe haven assets. According to Motilal Oswal Commodities (MOC), the MCX gold is expected to quote in the range of Rs 40,700-41,650 for 10 gm.
The start of the new year seems to have brought multiple triggers for gold, the biggest one being the geopolitical crisis in the oil-producing belt in the West Asia. While analysts are forecasting robust returns from gold in 2020 as central banks have been cutting interest rates, the geopolitical crisis has triggered a rally in the precious metal at the start of the year. Gaurav Dua, senior vice-president and head for capital market strategy at Sharekhan, said, "Our view on gold is positive for 2020 because the precious metal does well when central banks cut rates and launch quantitative easing programmes.
This puts presure on the dollar. With the geopolitical crisis, the upside has been very sharp."
Angel Broking on Wednesday said rising tension between the US and Iran boosted the appeal for the safe haven asset and pushed the prices higher.
The possibility of a trade deal being signed between the US and China is another trigger for the yellow metal. The deal which was supposed to happen towards the end of 2019 is now scheduled to be signed in January 2020. Markets will remain cautious till the trade deal is inked, which will again boost gold prices. According to MOC, the deadline for the signing of phase one deal is nearing, which will keep gold's prospects higher.