The financial markets has been on a complete roller coaster in the year 2020, worldwide. The coronavirus, which emerged in late December 2019 in China, engulfed the entire world in no time and led to sharp swings in the financial market space.
Amid this crisis, gold remained one of the most preferred assets, as it witnessed a spectacular run to an all-time high of Rs 56,191 per 10 grams, soaring by almost 43 percent and is about to settle with splendid returns of nearly 28 percent on the domestic bourses. In the international market gold’s price per ounce was $2000 but it went as high as $2075 in August.
The stellar performance can majorly be attributed to its safe-haven status amid the pandemic, which sent the world into a spin and forced central banks to slash interest rates to an all-time low to avoid serious economic damage. The sweeping stimulus packages doled out by major central banks and governments pushed gold prices to a record high.
By the end of the year, however, the main focus of the people turned to vaccine development, which effectively took some sheen off the precious metal, where prices retraced by almost 10 percent from their highs. Investors moved out of the safe-haven asset and preferred to park funds in risky assets that stand to benefit from the economic revival.
In this environment, it is time to evaluate the future course of one of the most favoured assets of this year. The question is whether it is the end of the rally or there are more legs to the yellow metal’s bull-run.