Drawing a parallel between the trade wars of the 1930s that triggered the Great Depression, and the ones happening now, Arvind Sahay, Chairperson, India Gold Policy Centre (IGPC) at IIM-Ahmedabad, spoke to Businessline about what possibly lies ahead for gold amid the prevailing local and global economic uncertainty. Excerpts:
What do you think is causing the recent gold price rally?
We have been saying at the IGPC since last December that gold prices are set to go up. It is likely to go up till at least the second half of next year. There are global and domestic reasons for this rally.
There is a growing concern about macroeconomic uncertainty. The US-China trade war is getting nastier. Now, the US President wants American companies to come out of China. The global financial system is under stress.
The banking systems in India, the US and Germany are facing stress. In India, exports are stagnating. The auto sector is in a bad shape. People are postponing purchases. In the times of economic uncertainty, people turn to safe havens. Gold is a safe haven - it always has been, through history. This triggers demand and hence there is an increase in gold prices.
How serious is this global economic uncertainty?
This story is from the September 13, 2019 edition of The Hindu Business Line.
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This story is from the September 13, 2019 edition of The Hindu Business Line.
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