Analysts see gold at ~40K by year-end

The price of gold is going up and has reached $1,500 per ounce even as investors globally are turning risk-averse.

The October futures price in India has touched ~37,800 per 10 gm. Analysts expect the price to touch ~40,000 by the end of December.

In the market for physical gold in Mumbai on Wednesday, standard gold (995 purity) was trading at ~36,750-36,850 per 10 gm, nearly ~1,000 lower than in the futures market. This is due to a discount of around ~550 per 10 gm in the spot market because of low demand. Futures prices also are high owing to two months’ cost of carrying positions because the futures contracts’ next expiry is in October.

Due to futures prices remaining high, last month several traders purchased gold in the spot market and sold in the futures market. This has resulted in 5.16 tonnes delivery of gold in MCX July futures, a record high.

Smuggled gold, which is selling sharply lower than the spot market price, is also responsible for discounts not ending.

Some consumers are selling high amounts of gold.

Gnanasekar Thiagarajan, director, Commtrendz Research, said: “The safe-haven demand, combined with a looming recession on the back of failed trade talks, is seeing a lot money moving into gold and silver. More retributory tariffs could push the world economy into a prolonged recession.” He sees prices moving from $1,490 at present to $1,520-1,525 per ounce by the end of August. This means according to him, on MCX futures price of ~38,500/39,000 can be expected. By the end of December he expects $1,600-1,650 (MCX: 41,000-42,000). Going by this, in the spot market, gold will cross ~40,000.