Gold could reach $4,700-4,800 by next fiscal year, says Nirmal Bang's Kunal Shah

Gold prices could swing sharply in the coming days. The metal is trading below its January record, but experts say its price could rise over the next few months.

According to Kunal Shah, head of commodities research at Nirmal Bang Securities, the growing debt of the US government and continued buying by central banks could speed up investment in gold. He estimates that gold could reach $4,700 to $4,800 by the next fiscal year.

In January this year, gold crossed the historic level of $5,500 for the first time. In the international market, gold is now available 20 per cent cheaper than that. Its price in the global market is currently about $4,400 per ounce. Shah says uncertainty in the world is growing, and the current level could be a good opportunity to buy gold for those looking for investment options. In his view, the fall is an important opportunity for investors.

Shah also explained the link between US debt and gold. US government debt is rising at about $2 trillion a year. When a country's debt rises, its currency weakens in the global market. When investors see a currency weakening, they put their money in safer places. For instance, if investors begin to find the dollar or US bonds riskier, they will pull out their money and put it in gold, which is considered a safe investment. If demand for gold rises, its price will also rise.

Central bank purchases are also said to play a large part. Central banks around the world, such as India's Reserve Bank of India (RBI) and China's People's Bank of China (PBOC), are reducing their dependence on the US dollar. In the process, they are steadily adding large quantities of gold to their foreign exchange reserves, which is keeping demand for gold at record levels in the market.

After the war between Russia and Ukraine began, the US and several other Western countries froze about $300 billion of Russia's foreign exchange reserves. Learning from this, central banks in many countries are now looking to gold. The reason is that gold is an asset not bound by any country's borders or the restrictions of governments, so it is considered the safest asset. Its value holds steady.