Gold price rally unstoppable; hits fresh all-time high, gains for 9th straight day

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Updated: Jul 29, 2020 10:47 AM

On MCX, gold August futures rose Rs 159 to hit a new all-time of Rs 52,750 per 10 grams, while silver September futures jumped Rs 383 to hit day's high of Rs 65387 per kg

gold, silver, gold ratesGold has rallied over 28 per cent this year, making it one of the best-performing assets

Gold prices edged higher for the ninth consecutive day and made a fresh high of Rs 52,750 per 10 grams on Wednesday, following the upward trend in the global market. Yesterday, Goldman Sachs raised its 12-month gold price forecast to $2,300 per troy ounce (toz), on the back of expectations of more downside in US real interest rates and a favourable environment for the safe-haven metal, according to Reuters. Gold August futures opened flat in today’s session as investors were tracking Federal Reserve’s policy outcome later in the day today. “Even after the invention of Covid-19 vaccine, there will be a rally in the bullion. Due to the virus, the impact on the economies of the US and EU has been pretty bad,” Jigar Trivedi, Fundamental Research Analyst, Anand Rathi Shares and Stock Brokers, told Financial Express Online.

Analysts expect more upside in the yellow metal prices going ahead. “Already it’s an election year for the US. And we believe that the US will not spare Chinese for this spread. Hence, 2021 will see more fireworks from the trade war between the US and China,” Trivedi added. On MCX, gold August futures rose Rs 159 to hit a new all-time of Rs 52,750 per 10 grams, while silver September futures jumped Rs 383 to hit day’s high of Rs 65387 per kg.

What fueling gold prices?

According to analysts, the fundamentals in gold are very strong and there are a host of factors that are contributing to the up move in the gold prices. “All factors and global uncertainties are lending support to metal prices. Rapid growth in COVID-19 cases, the major interest rate at zero, deepening of yields, US-China trade tussle, significant ETF flows, supply/demand dislocation, central bank gold buying, are few of the reasons supporting the rally. Even if the dust settles, the spillover effect could continue to support the same,” said Navneet Damani, VP, Motilal Oswal.

Gold has rallied over 28 per cent this year, making it one of the best-performing assets. “As investors seek to minimise the effects of the economic impact of COVID-19 and volatility in other investments, there are five major factors providing long-term support for gold prices: a weaker US dollar, low to negative bond yields, growing government debt, aggressive monetary policy easing and strong technical momentum,” said Ajay Kedia, Kedia Advisory, Mumbai.

Buy gold in range of Rs 51,000-50,000

“Technically, Gold on MCX could be bought in the range of Rs 51,000-50,000 stop-loss could be placed below Rs 48,250 and on the higher side could target levels of Rs 53,700-54,300 levels. Gold (Spot) is expected to quote in the range of $1,890 and $1,985,” said Damani

What do the charts say: “In Indian market gold has shown sharp up move in recent past and managed to give breakout above 50000 level on a closing basis, this indicates that upward momentum is likely to continue further. We expect in next 3-4 weeks gold may scale up towards 54000-56000 where some profit booking can be seen, however, on the downside 51500-51000 is likely to act as support. International Gold prices also trading above $1900 and managed to give breakout of its all-time high level of the year 2011. On monthly chart gold has formed a rounding bottom pattern on long term chart which indicates this upward momentum is strong and it may continue further,” Rajesh Palviya, Head Technical & Derivatives, Axis Securities, told Financial Express Online

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