MIDAS ROUTE

AWide movement in gold projected for nextyear fter a subdued Samvat 2073, gold is likely to do better this year, say experts.

While gold prices are expected to be volatile, bias would be upwards. Sudheesh Nambiath, lead analyst, precious metals for South Asia, GFMS TR said, “Gold in dollar terms is on an uptrend and prices are expected to touch $1,350 per ounce next Diwali.”

In India, the gold market will continue to undergo transformation, as the government is likely to announce a new comprehensive gold policy in the Union Budget. The new ecosystem is expected to drive gold demand.

However, experts caution that the current price of $1,280 an ounce is elevated as priced jumped in the last few months as geopolitical issues started emerging but are likely. Gold prices are expected to fall in the first half of 2018 and rise in the second half.

Bernard Dahdah, senior commodities analyst, Global Markets Research, Natixis said, “Gold prices are expected to come under further pressure in the first half of 2018, as result of two (expected) US rate hikes. That said, from the second half on the year, we should expect a slow recovery in prices that will continue into 2019.” He expects the end of US rate hikes and further drops in gold mine output to drive prices.

However, further geopolitical events should be momentarily supportive of gold prices. Natixis says the high and low for next year will be $1,350 and $1,120, respectively, showing a wide variation.

Nigam Arora, a leading global market analyst and author of the newsletter Arora Report gives a range of $1,180 to $1,420 for next Samvat.

Experts advice investors to buy at lower levels in the next few months and sell at the higher end of their range in the second half.

There are some factors that will have a bearing on the direction of prices, and clarity is expected to emerge in the next few months.

The first one is who will replace US Federal Reserve Chair Janet Yellen after her term expires in January next year. The new chair will decide the pace of interest rate and dollar strength. US President Donald Trump is expected to announce the new chairman next month.

“Gold is priced in dollars. When the dollar goes up, gold goes down. Dollar, in large part, moves on Federal Reserve’s policies. Barring any geopolitical crisis, if President Trump appoints a hawkish chair, gold may go down; a dovish chair appoint may make gold go up,” said Arora. Fed Chair appointment, Spain-Catalonia crisis to determine direction Govt likely to introduce new gold-backed investment products Measures to make trade more transparent under way