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Rally in gold may continue

There may be further upside, as negative real interest rates in developed world unlikely to end soon

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Gold

Sanjay Kumar Singh  |  Mumbai 

A woman buying gold as part of Dussehra celebrations in Mumbai (pic: Kamlesh Pednekar)
A woman buying gold as part of Dussehra celebrations in Mumbai (pic: Kamlesh Pednekar)

Gold has risen about 26.1 per cent year-to-date in 2016. The strong rally in yellow metal has raised three questions for investors: Will the rally continue? Will it be prudent to make fresh investments at current levels? And, should existing investors stay put or book profits? Recent data from the World Gold Council for the first half of 2016 show the upsurge in demand for gold was driven primarily by investment demand from investors in the developed world — US, Europe and Japan. The investment demand of 1,063.9 tonnes during the first half of 2016 was 16 per cent more than the previous high in the first half of 2009 (after the financial crisis).

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First Published: Thu, August 18 2016. 22:40 IST