Gold prices have been soaring over the past few days,gold prices touched a six-year high of over Rs 40,000 per 10 gram of 24k gold and experts expect the price of the yellow metal to go up in future.
What's driving sudden rise in gold prices?
The uncertainty over US-China trade talks, developments in the global market and talks surrounding recession are some of the key reasons that have triggered a rise in prices of gold.The escalating trade tension between the two largest economies in the world is likely to push up gold prices further.The weak global economic outlook for the entire year is another reason why gold prices are surging. The yellow metal is considered as a financial instrument that does not erode in valuation during periods of economic disturbance.The trade war between the US and China, which is into its second year, has triggering fears of a global economic slowdown, roiling equity as well as currency markets.Apart from concerns about global slowdown and worries that a US-China trade breakthrough is not happening soon, gold prices have a boost from buying from central banks.
The plummeting Indian rupee has also added to the pessimism among the domestic investors which are now including gold in their portfolios.There is a possible impact of increased buying by the local jewellers on the rising gold prices in India. The jewellers seem to be buying the gold and other precious metals ahead of the festival season in India which also marks the onset of the auspicious time of the calendar.
Where are we heading??
As we undoubtedly know, gold performs best in times of uncertainty.Well, the world is fracturing both socially and politically.Dissatisfaction and anger have translated into major political shifts, like Brexit and the 2016 and 2018 U.S. elections. We’re now seeing more protests and more riots — not just in the U.S. but also worldwide. We've seen the longest government shutdown in U.S. history.The economy is cooling and a majority of economists see a large slowdown, if not a recession, in the next several years.Bad actors like North Korea and Russia have gotten more brazen. China has gotten more aggressive. The U.S. is no longer seen as the world’s most powerful and influential nation. And the odds of a large-scale war are at their highest levels in decades.No doubt, the world is becoming increasingly chaotic. Long-held rules and norms are being questioned, tested, and violated on a daily basis. And it will only continue getting worse.
And as the world’s ultimate safe haven, gold will continue benefiting from this shift. We may even head towards 42000 per ten grams if the trade tension continues.
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