Gold

As the country approaches the season of prosperity, it is very important to see how has the gold prices have moved till now and what does it look like from here on. There are several factors which have contributed to gold's movement in past few years, the Covid-19 pandemic being one of the major one. Although, there are three major factors to keep an eye on for gauging direction in gold -- geo-political tensions, inflationary concerns and the central bank's policies.

Sustained high prices of gold, as well as steady demand, is expected to raise gold jewellery retailers' revenue by 12-15 per cent next fiscal, said ratings agency Crisil. It also said that the segment's revenue is expected to grow by 20-22 per cent this fiscal, albeit on a lower base of the Covid-19 pandemic-impacted last fiscal. Besides, it said that operating margins should improve 50-70 basis points (bps) on-year to 7.3-7.5 per cent in fiscal 2023, because of elevated gold prices and improved operating leverage.

"Except for the UK, the interest rates in the rest of Europe have not been hiked so far, and it is felt that it may be delayed," the wealth management firm said. An aggressive stance by the US Fed is likely to cause some problems as the US dollar yields rise and the currency strengthens. However, the prices of commodities quoted in US dollars is likely to gradually ease.

Devaluation of gold and other asset classes pulled India's foreign exchange reserves lower by $2.597 billion during the week that ended on March 18. Reserve Bank of India data showed that India's forex reserves fell to $619.678 billion from $622.275 billion reported for the previous week. The country's forex reserves consist of foreign currency assets (FCAs), gold reserves, SDRs, and the country's reserve position with the IMF.

Rush for safe haven investments during the ongoing market volatility triggered by the Russia-Ukraine conflict is expected to keep global gold and silver prices at elevated levels. Besides, sanctions on Russia, which is a major producer of gold, is expected to reduce supply. A sell-off in equity markets by FIIs has also triggered a rush for these safe haven options. Last week, inflationary fears on the back of Russia-Ukraine conflict pushed gold price to Rs 55,000 per 10-gram.

The fears of supply shortages due to the Russia-Ukraine conflict along with robust demand has kept prices higher. Sanctions on Russia, which is a major producer of gold, is expected to reduce the supply. Besides, a sell-off in equity markets by FIIs has triggered a rush for safe haven investment. The FIIs net sold Rs 8,142.60 crore worth of equities. Last week, MCX gold prices had increased sharply by 4.66 per cent to Rs 52,559 levels.

Inflationary fears triggered a rush for safe haven investments during the ongoing market volatility that pushed up the global gold price to $2,000 per ounce on Monday. Accordingly, the fears of supply shortages due to the Russian-Ukrainian conflict along with robust demand has kept prices higher. Besides, sanctions on Russia, which is a major producer of Gold, is expected to reduce the supply.

Accordingly, the fears of supply shortages along with robust demand has kept prices higher. Besides, sanctions on Russia which is a major producer of Gold is expected to reduce supply. Last week, MCX gold prices increased sharply by 4.66 per cent to Rs 52,559 levels. Besides, 'Spot Gold' prices increased by 4.30 per cent to $1,970.35 per ounce.

Suman Chowdhury, Chief Analytical Officer, Acuite Ratings & Research, said international gold prices have remained mostly above $1,750 for most of the months in the last one year but despite that gold imports by India have remained high. Gold imports have actually risen sharply to $40.5 bn in the April-January of FY22 which is the highest ever for the country in the past comparable periods.

Global equity indices slide and commodities, including gold, surged as hostilities started. Concurrently, gold prices rallied with MCX Gold April futures surging by 2.25 percent to Rs 51,500 per 10 gram. Besides, 'Spot Gold' prices at COMEX traded near $1940 per ounce breaching near-term resistance of $1920 per ounce while the next target seems at $1970 per ounce on geopolitical risk.