Correction in Gold Prices Is an Opportunity for Fresh Investment

SEATTLE (Scrap Monster): As per industry experts, the recent correction in gold prices offers a perfect opportunity for fresh investment in the yellow metal.

Gold emerged as the best performing asset class in the previous year, recording a yearly return of around 27%. The rally in gold prices was mainly triggered by the economic uncertainties induced by Covid-19 pandemic which gripped the entire world for several months in a row. However, with the news of vaccines to control the pandemic, the prices started to recede towards the end of the year. It has corrected by almost 9% from its peak touched in August 2020.

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The projected better-than-anticipated economic recovery across the world too boosted investments towards riskier assets. Incidentally, the International Monetary Fund (IMF) has revised upwards its global GDP forecast to -4.4% in October, as compared with negative growth of 5.2% in end-June last year.

As per industry experts, the recent pullback in gold prices is just a short-term phenomenon. The long-term factors are still favourable for gold, they noted. Some correction in prices was warranted after a significant run-up, said Vinay Khattar, head, research, Edelweiss Wealth Management. Gold will resume its upward rally in 2021, mainly driven by various macroeconomic factors, he added.