Gold is considered one of the safest investments around the world. And during uncertainty, Economic crises, and Geopolitical tensions, it maintains its value while currencies depreciate and equity markets underperform. Having a finite supply which makes it a very valuable resource, while paper currency can be printed irrationally.
Gold futures Price on MCX has reached a high of 95,8001w, rallying over 6 percent in the past week and over 10 percent in the last 3 months, and Gold prices in the US have reached $3,341 / OZ.
WHY GOLD IS AT AN ALL-TIME HIGH?
Several reasons can be attributed to the Gold rally, as it has outperformed the major assets around the world. For the recent rally of gold, one of the primary reasons can be attributed to the recent trump tariff announcement. These announcements can lead to political instability and economic uncertainty with potential disruptions to global trade.
Gold has been rallying even before the trump announcement, and the reason for that can be attributed to Central banks around the world buying gold. The Central banks have been continuously increasing their gold reserves, with most gold being bought by Poland, and in total, the central banks have increased their reserve by 1,045 tonnes.
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FACTORS THAT INFLUENCE GOLD PRICES
There are several factors that can influence gold prices, and some of the common factors are Economic factors like Inflation, Interest rates, US dollar strength, and Economic Growth and Stability. On a Geopolitical Basis, factors like Political instability and Trade wars affect gold prices. Other Factors that affect gold prices are Market sentiment, Government policies & regulation, and supply and Demand.
GOLD PERFORMACNE
Gold has outperformed Sensex in a 3-year, 10-year, and 15-year time frame. On a 15-year basis, gold has given a CAGR return of 11.50 percent compared to 10.30 percent for Sensex. On a 5-year basis, Gold has given a return of 14.40 percent compared to a 14.60 percent return of Sensex. On a 3-year time frame, gold outperformed Sensex with a 16.80 percent return and Sensex with 11.60 percent
GOLD TARGET
Generally, the target for gold is actively given by foreign brokerages and JP Morgan has given a forecast of $3,000/oz, HSBC has given a forecast of $3,015/oz, and Deutche Bank has given a forecast of $3,139 – 3700/ oz, and the target given by UBS is for $3200/oz. All these targets are for US gold Futures.
Written By Abhishek Das
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