Experts are of the view that with fundamentals remaining supportive, the yellow metal could climb further over the next 6-12 months.
Rate cuts a key driver
The recent 50 basis-points (bps) rate cut by the United States Federal Reserve (US Fed) has provided further impetus to the yellow metal. Gold has a negative correlation with real interest rates. "Hereafter, the decline in interest rates should be larger than the decline in inflation, which should be supportive for gold prices. As real interest rates decline, the opportunity cost of holding gold comes down and more investors move into it," says Chirag Mehta, chief investment officer, Quantum Mutual Fund.
The frequency of rate cuts by the US Fed may increase over the next 6-12 months, pushing the price of the yellow metal further up.
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