Amit Goel, Co-founder and Chief Global Strategist of PACE 360, on Monday, October 23, shared insights on the performance of gold and its investment prospects. Gold prices have been on a steady rise, hitting all-time highs in many countries, like Australia, Taiwan, Japan and China.

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However, the Indian market still holds around ₹60,000 per 10 grams.

Goel expressed his bullish sentiment towards gold, stating that his firm has been advocating for gold as an investment for several years. In 2019, when gold was priced at approximately ₹32,000 per kilogram on MCX and around $1,260 per ounce globally, PACE 360 made a significant bullish call. Recently, Goel highlighted specific indicators that indicated a rapid upward trajectory for gold.

One of these indicators was the oversold position of commodity traders (CTA positioning) on gold. Historically, when CTA positioning reaches such extreme oversold levels, gold experiences a substantial price increase within days or weeks. Goel also pointed out a rare occurrence in the negative speculative positions on COMEX, which tends to result in a short covering rally and, over the next year, an average increase of 15-20% in gold prices.

Furthermore, the positions on the Commodity Futures Trading Commission (CFTC) were exceptionally light, pointing towards the potential for a gold rally. Global investors were observed selling ETFs, reducing the total position from 94.5 million ounces to 86-87 million ounces.

"This not only indicated technical overselling but also a lack of global interest in owning gold through ETFs," Goel told CNBC-TV18.

Most banks and brokerages now forecast gold levels ranging from $2,100 to $2,500 per ounce in the next year. Amit Goel shared this optimism, citing the macroeconomic environment as a key factor. Over the past year, the dollar index has been strengthening, but Goel believes this will shift in favour of gold in 2024.

He explained, "Gold, currently priced at around $1,975 per ounce, is expected to reach approximately $2,300 to $2,400 per ounce by the same time next year. Gold has remained relatively stagnant for the last 12 years, and it is significantly undervalued relative to its historical performance, the US CPI, and the dollar index."

However, Goel cautioned that a "war premium" of about 3-4% has been added to gold prices due to recent geopolitical tensions in the Middle East. If this war premium were to be removed, gold prices could temporarily drop to approximately $1,900 to $1,925 per ounce.

Nonetheless, he emphasised that the long-term outlook for gold remains extremely bullish across all timeframes.

(Edited by : Vijay Anand)

First Published:Oct 23, 2023 5:13 PM IST