Gold price may cross Rs 55k per 10 gm next year on COVID woes

MUMBAI: Gold, which lost its sheen to some extent in the second half of 2021, is likely to regain the glitter in the New Year and cross the Rs 55,000-per-10-grams level amid pandemic woes, inflation worries and stronger US dollar.

After a stellar run up in 2020 when the yellow metal touched a record high of Rs 56,200 on the MCX in August, the prices are near Rs 48,000 per 10 grams now. This is roughly 14 per cent lower from the all-time highs and 4 per cent lesser compared to January 2021 levels.

All said, the current level is still 3 per cent higher than overall international prices, largely thanks to a weakening rupee. CommTrendz Co-Founder and CEO Gnanasekar Thiagarajan said the reason behind the underperformance this year was the rush of liquidity in the equity markets.

“Meanwhile, the possibility of more

COVID restrictions being imposed for Christmas and New Year holidays loomed over several European countries as the Omicron variant spread rapidly. US health officials urged Americans to get booster shots, wear masks and be careful if they travel over the winter holidays,” Thiagarajan said.

According to him, tightening of rates would make the US dollar more appealing relative to currencies bound for relatively looser monetary policies such as the euro and yen.

Spot gold was at over $1,791 an ounce level in the international market while in India, MCX gold futures was at Rs 47,740 per 10 grams on December 29. “We expect prices to move in the range of $1,700-1,900 an ounce in the first half of 2022 and cross $2,000 in the H2. We expect domestic prices to be in a range of Rs 45,000- 50,000 and cross Rs 55,000 in the H2 of 2022 for MCX,” he said.