With the fears of full-fledged war looming around after Russian President Vladimir Putin announced a 'military operation' in Ukraine earlier today, gold prices are expected to go up sharply in the near future.
The geopolitical tension, coupled with the likely slowdown in the global economy and high inflation, can lead to a major spike in gold prices. According to experts, gold prices are expected to touch Rs 55,000 this year and Rs 62,000 in next year. In early morning trade today MCX gold rate increased by Rs 1,400 touching Rs 51,750 per 10 gm levels.
“Outlook on gold is very bright on account of two reasons. One is the geopolitical event, which can become a full fledged war between Russia, the European and the NATO allies. Apart from that, now there is going to be economic slowdown and a higher inflation across the world. So I don't think that central banks can now raise the interest rate and that will lead to another spike in inflation across the world.” says Kunal Shah, Head of Commodities Research at Nirmal Bang.
Shah added, “I am expecting gold prices to shoot up and test levels of Rs 54,000-Rs 55,000 in this year and in next year Rs 60,000-Rs 62,000. So, on an average gold will go up at least by 10,000 rupees in next two years.”
Equity market has nosedived and continuous outflow are witnessed. Moscow exchange has suspended trading across all markets. Experts say, this kind of news will improve safe haven buying in gold for sure. “Geopolitical tensions take time to resolve and market needs time to discount it. Now there is low expectation of 50 basis points hike in interest rate by Fed in the month of March. The probability of a 25-basis point rate hike from the US Fed spiked to 90.5 per cent on February 24 from 54.7 per cent a week ago. If it happens then it will give further escalation to the gold prices,” says Vandana Bharti, Commodity Head, Research, SMC Global Securities Ltd.
Bharti added, “Gold will ignore the rise in dollar index for the time being and most likely to continue its north ward journey. ETF buying improved in 2022 along with physical buying. More investment buying is expected in 2022. On MCX, we can expect 53,000 levels soon and in midterm if tension prolong then there are strong chance; hitting the 54000 levels. Similarly, in COMEX it is likely to touch $1975 very soon and then there should be some pause in the prices. Any correction will stimulate further buying and in 2022 we can expect $2050-2100 levels in gold,” said Bharti.
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