February tends to be a volatile month for domestic stocks as investors react to speculative news ahead of the annual Budget. But if there is one asset class, which is unlikely to be impacted much by the forthcoming budget, it is gold, experts say.
Prices of the yellow metal have been rising steadily in global markets. On Friday, spot gold hit its highest since October 28, 2015 at $1,174.50. In India, gold prices hit a nine-month high of Rs 27,700 per 10 grams last week.
Veteran technician Sushil Kedia says gold prices may correct to their recent support of $1,030-$1,040 an ounce, but he expects gold prices to almost double past $2,000 an ounce eventually.
"Gold is a super asset and a super currency... In a panic case, the spike in gold can be faster," he said. (Watch)
Mr Kedia expects the US dollar to weaken against a basket of other currencies. If his call on dollar turns true, it will benefit commodities priced in dollars, including gold.
Mr Kedia's bullish call on gold is a "brave" one, considering the precious metal has logged losses for three consecutive years. But many other analysts are increasingly turning optimistic on gold.
Sanjiv Bhasin, executive vice president (markets & corporate affairs) at domestic brokerage IIFL says weak oil prices, China slowdown and currency woes are factors that will help gold.
"We suggested that gold would start to outperform from January 2016 which it has done with remarkable accuracy," Mr Bhasin told NDTV Profit last week.
Globally, analysts are betting on higher gold prices because of the increasingly dovish trend by global central banks.
"We prefer gold," Lachlan Shaw of UBS told Reuters.
(With agency inputs)
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