Gold prices are expected to rise in the coming months as a result of the elevated risk environment, rising inflation, slower growth, and low-interest rates. "Correction from short-term hurdles could be used as a buying opportunity," says Navneet Damani, VP - Commodity & Currency Research, Motilal Oswal Financial Services. "However, over the next 12-15 months, an extended rally could be seen over $2,000 (per ounce), with a potential to make new lifetime highs." One ounce weighs 28.34 grams. Gold finished the year 2021 about 4% lower, closing at $1,806/oz, as prices rallied near the end of the year on the back of the rapidly spreading Omicron variant. In India, gold is currently trading at Rs 48,535 (per 10 gms). The current gold price in USD is $1840/oz.
According to the Motilal Oswal report, inflation has been one of the main highlights for 2021, and it may continue to be so next year. Rising inflationary expectations have been increasing market distress for a long time, but the panic began when US Governor Powell acknowledged the same and began to act on it. "Even with major central banks' measures to calm these expectations, there are expectations that the rise in crude oil prices and the ongoing panic over supply chain issues will continue to support inflationary expectations." As a result, gold prices have remained stable even after the Fed's tapering announcement and three rate hikes are expected. Market participants did, without a doubt, discount the next year's rate hike expectations, even though prices recovered from that drop," Damani says. According to a World Gold Council report, while rate hikes can create headwinds for gold, history suggests that their impact may be limited. Simultaneously, elevated inflation and market pullbacks will likely sustain demand for gold as a hedge and jewelry, while central bank gold demand may provide additional support.