The Hindu Business Line : Gold is investors' darling

Tensions in West Asia, rise in crude prices and many other factors have made gold a darling of the commodity investors. But for any major dampener like frequent rate hikes by Bank of Japan, portfolio managers are expecting gold to break the $850 barrier in the long term. In the short and medium term, movement will be $725-750 range-bound.

Gold crossed $670-mark on Monday, up from a low of $580 recorded two weeks ago. Silver is expected to be on a gradual uptrend.

Base metals

The base metals segment is expected to remain bullish in the short and medium term. Copper and zinc may be the major drivers in the base metal segment.

"Gold closed at Rs 10,056 at MCX on Saturday. We expect it to touch Rs 11,000 in six months," Mr Vivek Bajaj of Mars Comtrade Pvt Ltd told Business Line. According to him, the gold-silver ratio is now hovering at 57.43 as against the reference range (calculated on the basis of last five year's prices) of 57.5 to 61.5.

Bullish trend

"There seems to be enough headroom for gold prices to continue a bullish trend in the long term. Moreover, rise in crude prices, strengthening of inflationary pressure and signs of stagnation in the real estate market makes gold an investor's choice," he said.

His views are more or less echoed by Mr Anand Singhania of Prompt Commodities and Mr Naveen Mathur of Religare Comdex; both are of the view that gold will break the $700 barrier in the short and medium term.

As gold moves silver is also expected to move up but on a comparatively gradual pace. Silver movement is linked to copper movement (since 65 per cent of silver is sourced from copper mines).

The latter is following a volatile trend now. However, the rising demand in China, coupled with workers' strike or such related issues in Chile and Mexico may put pressure on supplies to make copper bullish in the medium term.

A similar trend is expected in zinc.

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