Gold is trading below its record high level set in January, but experts say that gold may see a rise of up to 20% in the coming time.
Gold Rate Outlook
Gold is currently trading below its record high in January, but its prices could surge in the coming months. This isn't our assertion, but rather experts' belief. According to a CNBC TV18 report, Kunal Shah, Head of Commodities Research at Nirmal Bang Securities, says that rising US government debt and continued central bank purchases could boost gold investment, pushing its price to $4,700-$4,800 by next year.
Kunal Shah says that after falling from its peak of $5,500 to around $4,000, gold at current levels could be a good buying opportunity for investors seeking investment options amid growing global uncertainty. It's worth noting that in January of this year, gold surpassed its historic $5,500 level for the first time. Compared to this, gold is currently available 20% cheaper in the international market. Gold is currently trading around $4,400 per ounce in the global market. Kunal Shah believes this decline presents a significant opportunity for investors.
The connection between rising US debt and gold
America's government debt is growing at a rate of approximately $2 trillion each year. As a country's debt increases, its currency weakens in the global market. When investors perceive a country's currency is weakening, they invest their money in safe havens. For example, if investors perceive the dollar or US bonds as increasingly risky, they will withdraw their funds and invest them in gold, which is considered a "safe haven." As demand for gold increases, its prices will also rise.
Central banks continue to buy
Central banks around the world, including the Reserve Bank of India (RBI) in India and the People's Bank of China (PBOC) in China, are reducing their dependence on the US dollar. In doing so, they are steadily adding significant amounts of gold to their foreign exchange reserves, keeping gold demand in the market at record levels.
Following the outbreak of war between Russia and Ukraine, several Western countries, including the United States, seized Russia's foreign exchange reserves, estimated at $300 billion. Learning from this, central banks in many countries are now reducing their reliance on gold, as gold is an asset that is not bound by national borders or governments, making it the safest asset. Its value remains constant.
