Gold prices down 12% YTD: Time to buy gold? Analysts see MCX gold at Rs 50,000 by year-end

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April 06, 2021 10:15 AM

Gold prices edged higher on Tuesday in Indian markets amid positive global cues.

gold, gold price, MCX gold, MCXFrom a record high level, gold prices have witnessed a correction of Rs 10,661 per 10 gram or 18.97 per cent. Image: Reuters

Gold prices edged higher on Tuesday in Indian markets amid positive global cues. On MCX, gold June futures were trading Rs 181 or 0.40 per cent up at Rs 45,530 per 10 grams as against the previous close of Rs 45,349. Silver May futures were ruling at Rs 65,031 per kg, up Rs 469 or 0.73 per cent, as compared to a previous close of Rs 64,562 on the Multi Commodity Exchange. Gold on MCX hit an all-time of Rs 56,191 per 10 grams last year in August. Since then, the yellow metal has been witnessing volatility. The 10-year and 30-year yields fell quite notably on Thursday and Friday, and gold duly recaptured all of its losses.

According to an analyst, US Economic numbers were seen positively especially jobs related, however, hourly earnings, construction spending, pending home sales and factory orders declined and awaits higher tax as the US president plans a $3trillion infrastructure plan. These would put short term pressure on the US economy and impact US yield and dollar. “Technically, it has formed a double bottom pattern on a daily chart, a break above 45200 levels would convince a breakout of the pattern,” Rajesh Palviya, Head — Technical & Derivatives Research, Axis Securities Ltd, told Financial Express Online. He added that in conjunction with this pattern, its momentum indicator RSI (14) has depicted positive divergence where RSI is making higher bottoms while price action is not.

Palviya said that this suggests that the market is accumulating strength and a break above 45200 would take gold prices towards 46000 levels in the coming day ahead. Globally, gold prices rose on Tuesday, as a weaker dollar made bullion cheaper and more attractive for buyers outside the United States, while a pull-back in US Treasury yields provided further support. Spot gold was up 0.3 per cent at $1,733.31 per ounce, while gold futures were up 0.4 per cent at $1,735.10 per ounce, according to Reuters.

‘Investors should buy gold, as it’s down 12%’

From a record high level, gold prices have witnessed a correction of Rs 10,661 per 10 gram or 18.97 per cent. The weakness in the dollar is supporting the gold prices. Overall the optimism over a strong global economic recovery will keep risk on sentiments higher, giving a boost to gold prices. “The counter has witnessed a 10-12 per cent correction so far this year, at this point of time investors should buy, ” Rahul Gupta, Head of Research, Emkay Global Financial Services, told Financial Express Online. He also said that the downside in MCX gold looks to be limited to around Rs 43,000, so investors cannot lose much and these are the good levels to enter as the uptrend may continue towards Rs 46,000. “A breach of Rs 46,000, can push prices towards Rs 48,000-49,000,” he added.

‘MCX gold may hit Rs 50,000 per 10 gm by Dec-end’

In the previous session, MCX gold faltered marginally by approximately 0.15 per cent for the June contract and silver declined by nearly 0.9 per cent. The dollar slumped to an almost two-week low versus a basket of rival currencies, while US Treasury yields also fell as investors paused recent selling of government bonds, said Jigar Trivedi, Fundamental Research Analyst, Anand Rathi Shares and Stock Brokers. From the investment point of view, Trivedi said that the current fall of approximately 17-18 per cent from an all-time high is a good buying opportunity. According to government sources, India’s March imports have risen multi-fold due to cut in tax and correction in price. “We may see a rise in jewellery buying in the coming weeks. Also, these are the best levels that one should start accumulating the gold for a year-end target of Rs 50,000,” he added.

(The views in this story are expressed by the respective experts of research and brokerage firm. Financial Express Online does not bear any responsibility for their advice. Please consult your investment advisor before investing.)

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