As long as yields stay below 1%, gold prices will remain positioned to the upside. Bouts of volatility and pullbacks in gold prices will occur from time to time.
Gold prices fell on Wednesday as investors awaited minutes from the US Federal Reserve’s last policy meeting. Analysts believe that an intermittent profit booking cannot be ruled out on signs of easing US-China trade tensions and optimism around COVID-19 vaccine. At 10 AM, gold October futures were trading 0.60 per cent or Rs 321 down at Rs 53,250 per 10 gm, while silver September futures dropped 1.62 per cent or Rs 1,128 to rule at Rs 68,377 per kg on MCX in Wednesday’s session. Yesterday, news reports came in that Senate Republicans are planning to introduce a scaled-back coronavirus relief package. The slimmed-down bill will provide a $300 a week in federal unemployment benefits, which supported gold prices. “US lawmakers remain locked in a stalemate over a potential new coronavirus stimulus deal and any breakthrough in reaching another stimulus deal would lead to a decline in precious metals. Any positive development on the vaccine front would also boost risk sentiment and keep the pressure on gold prices,” Bhavik Patel, Senior Technical Research Analyst at Tradebulls Securities, told Financial Express Online.
Patel added that as long as yields stay below 1%, gold prices will remain positioned to the upside. Bouts of volatility and pullbacks in gold prices will occur from time to time. Globally, gold prices were trading firm with spot gold up 0.1 per cent at $2,002.12 per ounce, while US gold futures eased 0.1 per cent to $2,011.60 per ounce. Among other precious metals, silver rose 0.6 per cent to $27.82 per ounce, platinum gained 0.2% to $958.33, and palladium edged 0.1% to $2,190.98. “A direct break of $2020 is required to continue the bullish outlook, else intraday bias is largely on the downside. However, major downside moves are likely only if prices break $1970,” said Hareesh V, Head of Commodity Research at Geojit Financial Services.
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Gold to touch Rs 54,500 level in coming week
On August 7, 2020, gold prices hit a record high of Rs 56,191 per 10 grams, while silver touched an all-time high of Rs 77,949 per kg. While, in the following week, gold fell below Rs 50,000 per 10 gram. In today’s session, it is hovering around Rs 53,250 per 10 grams. “After corrective move in recent past gold has taken support near to physiological support level of 50000 and shown buying action and retraced 50% of recent fall from 56190,” Rajesh Palviya, Head Technical & Derivatives, Axis Securities, told Financial Express Online. Palviya added that technically gold is in the bullish zone for the long term time frame. “We expect gold can show furthermore bullishness and it can scale up towards 54000-54500 in the coming week. However on the lower side 51500-51000 are likely to act as a good support area for minor corrective action,” he added.
Bhavik Patel said that the rally in gold and silver this week was helped by a weak US Dollar (lowest since 2018) and 10 year US Treasury yield which was trading around lowest in a week. “$2000 seems to be a strong hurdle for gold and if prices close back to back above $2000 this week then the rally will be enough to test $2089 resistance but if gold fails to close above $2000 this week, we may see another potential decline,” Patel added.
(The views and investment tips 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.)