Gold Price Rise- How far Will it Go?

In the USA, the rise in prices is mainly due to the Federal government’s loose monetary policy because of two reasons. Firstly, it is due to the coronavirus and the ongoing-pandemic. Secondly, prices are rising due to the continuing geopolitical tensions between US and China. The demand for Gold Loans is also on the rise in India.

The real question that everyone is asking is what does the future hold for gold prices.

Gold price records 7 straight gains

Gold prices have been on a steady rise since the last quarter of year 2018. That was two years ago. Anyways, since that time gold prices have been showing record gains per quarter. This was the longest quarterly run gain since the financial crisis of 2007.

Today, the gold price rise has a similar momentum. If this momentum continues for a few more quarters, the industry sector can recover well. This quarter’s percentage gain is highly dependent on the Covid-19 situation. It can’t be said when a vaccine for the pandemic virus will be available, and that means that ongoing shutdowns will continue to limit economic growth globally.

For gold loan prices though, it means that there is a strong chance of price rise gain in Q3 and Q4.

Gold stocks and bonds

There is a reasonable positive relation between gold prices and stocks. Historically, gold is seen as a risk-off asset. Investors put money on gold when they do not believe that the stock market will rally.

Nonetheless, the most important point here is that the gold price is moving higher due to the government’s monetary support. The momentum is due to two reasons. The first reason is that the investors see the government’s effort as benign and encouraging. Gold price is benefitted by a weak currency. Lastly, many investors have not deployed their whole capital in equity, and are hedging risks by using gold.

Goldman Sachs Price Target

The company believes gold price rise is likely to continue. Their target for gold price is Rs. 5270 per gram. This goes to show that the gold rate has very high potential in the market right now.

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