Gold prices continue to rally, near 51,000 per 10 gms; should you buy or sell the yellow metal?

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Published: July 24, 2020 10:49 AM

Gold prices have surged over 32 per cent from March low of Rs 38,500 per 10 grams. While on a year-to-date (YTD) basis, yellow metal prices have gained around 30.10 per cent.

gold, silverGold August futures were trading Rs 105 or 0.21 per cent higher at Rs 50,805 per 10 grams

Continuing the gaining momentum, gold prices surged yet again in Friday’s trade as investors rushed for safe-haven assets amid coronavirus pandemic and geopolitical tensions. In today’s session, MCX gold prices are off from a record high of Rs 50,936 per 10 grams touched in the previous session. Gold prices have surged over 32 per cent from March low of Rs 38,500 per 10 grams. While on a year-to-date (YTD) basis, yellow metal prices have gained around 30.10 per cent. “Gold price continues to make fresh high in MCX while it is at nearly nine-year high in COMEX. Gold is not far from the record high of $1920 it made in 2011 and looking at the recent flare-up between the US and China, we might see gold surpassing $1920 soon. Buying interest in gold is strongly looking at persistent weakness in the US Dollar in the wake of renewed concerns over US economic recovery and fresh lockdown,” Bhavik Patel, Senior Technical Research Analyst at Tradebulls Securities, told Financial Express Online.

Gold August futures were trading Rs 105 or 0.21 per cent higher at Rs 50,805 per 10 grams, while silver September futures declined Rs 170 or 0.28 per cent to rule at Rs 61,020 per kg on the multi-commodity exchange. Silver prices have rallied over 81 per cent since March, from a low of Rs 33580 per kg. In 2011, silver prices hit a record high of Rs 73,600 per kg. Analysts say that another round of stimulus by the United States has also made gold attractive. “Traders who have bought gold around Rs. 49000, 10 days back are staring at good returns and so short term traders should book some profits as in near term, gold is looking overbought,” Patel said.

MCX Gold August is trading well above 50500 levels and it might trade with volatility in the coming session, says the analyst. “However prices have entered uncharted territory where it will continue bullish momentum above 50000 levels up to 50800-51100 levels. Support is placed at 50250-49930 levels,” said Sriram Iyer, Senior Research Analyst at Reliance Securities. Factors such as escalating tensions between the US and China, potential stimulus deals and weak US Dollar could limit downside.

Globally, spot gold was little changed at $1,885.62 per ounce. US gold futures eased 0.3 per cent to $1,884.60. Reflecting investor sentiments, SPDR Gold Trust ETF fund said its holdings rose 0.17% to 1,227.05 tonnes on Thursday from 1,225.01 tonnes on Wednesday. “For positional traders who are looking to buy in the physical market should wait for some correction as prices are in an overbought zone and correction is due. Any fall near Rs 49400-49000 is ideal for long term traders,” Patel added.

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