Gold investors: Gold price off 10% from record high; watch these factors before buying or selling yellow metal

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Updated: March 20, 2020 12:37:08 PM

Gold futures is down more than 10 per cent or Rs 4,810 from its record high level of Rs 44,961 per 10 grams while silver futures dropped a whopping 28 per cent or Rs 14,137 from its all time high level of Rs 50,123 per kg.

Gold price today, Silver ratesHowever, MCX gold futures gained 4.3 per cent from its recent low of Rs 38,400 per 10 gram hit on March 16, 2020. Image: Reuters

Even as gold price in Indian markets edged higher on Friday, it is significantly down from the record high levels hit earlier this year. Gold futures is down more than 10 per cent or Rs 4,810 from its record high level of Rs 44,961 per 10 grams hit on March 6, 2020, while silver futures dropped a whopping 28 per cent or Rs 14,137 from its all time high level of Rs 50,123 per kg touched on February 24, 2020. Demand for gold is diluted due to global uncertainty and lockdown in the wake of coronavirus across the globe, analysts say. Commodity experts have mixed views on gold, as some say to sell while others suggest to stay cautious amid high volatility.

As of 11.30 AM, gold April futures gained Rs 307 or 0.77 per cent to Rs 40,138 per 10 grams while silver May futures edged Rs 890 or 2.54 per cent higher to trade at Rs 35,992 per kg on MCX in Friday’s trade. “We have seen that buyers are almost negligible in the physical market. Although people right now are preferring to sit on cash, we recommend to sell gold as the yellow metal is in bear mode. One may sell MCX gold at 40200 – 40300 levels with a stop loss of Rs 40,750 and Rs 39,500 target. In the Comex, gold is trading below its strong support $1500 levels. It is expected to touch $1420 – $1400 levels,” Anuj Gupta, Deputy vice president – Research, Angel Broking told Financial Express Online.

Gold prices may retest Rs 45,000 level

However, MCX gold futures gained 4.3 per cent from its recent low of Rs 38,400 per 10 gram hit on March 16, 2020, and silver rose over 7 per cent from its recent low of Rs 33,580 per kg touched on March 18, 2020.“Gold recorded a similar pattern during the 2008 financial crisis, though at that time gold recovered relatively quickly, same we can see this time also as the coronavirus pandemic sent investors rushing to hoard physical gold,” Ajay Kedia, MD, Kedia Advisory, told Financial Express Online. Seeing the correction in gold prices, Kedia is bullish on yellow metal adding “current rate cuts and other monetary policy loosening measures being adopted by many central banks should make gold captivating, which can avail Indian gold prices to retest level of Rs 45,000 per 10 grams again expeditiously,” Kedia added.

Volatility is new normal these days

Extending the previous session’s small rally, MCX gold rose today but the metal was on track to post its second weekly drop due to a rush for cash amid the widening economic fallout from the coronavirus outbreak. Jigar Trivedi, Fundamental Research analyst, Anand Rathi Shares and Stock Brokers suggests investors to stay cautious in the intraday as huge volatility is new normal now a days. He further said, “The investors have continued to liquidate from the exchange-traded-funds. And the dollar index has reached multi month high hence there is pressure on the yellow metal”.

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