Gold prices inch closer to Rs 55,000 per 10 gm, global gold breaches $2,000; prices may rise more

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August 5, 2020 10:17 AM

With today's rally in gold prices, the yellow metal is now up 42.32 per cent from March lows of Rs 38,500 per 10 grams.

gold, silver, gold pricesSilver prices have climbed up 107 per cent from Rs 33,580 per kg touched in March this year

Gold prices today continued to rally and made a new all-time high of Rs 54,797 per 10 grams, mirroring the rise in overseas gold. In the international market, gold and silver prices are rising at a significant pace, as both metals breached the key level of $2000 and $25, respectively. On MCX, gold October futures rose Rs 246 to hit a record high, while silver September futures fell Rs 186 or 0.27 per cent to rule at Rs 69,611 per kg. Analysts say diminishing hopes of an immediate economic recovery amid rising pandemic cases continue to support gold’s bullish outlook. “More economic stimulus measures from central banks to combat the economic blow due to the pandemic, escalating geopolitical uncertainties and a weaker US dollar will continue to lift gold’s safe-haven appeal and demand for the commodity,” said Hareesh V, Head Commodity Research at Geojit Financial Services.

With today’s rally in gold prices, the yellow metal is now up 42.32 per cent from March lows of Rs 38,500 per 10 grams. While silver prices have climbed up 107 per cent from Rs 33,580 per kg touched in March this year. Silver prices touched a record high of Rs 73,600 per kg in 2011. “Massive explosion in Lebanon raised geopolitical risk, worsening the US-China trade relation, weaker dollar and hopes of more economic stimulus to combat the blow from the COVID-19 crisis boosted the safe-haven metal’s appeal,” said Jigar Trivedi, Fundamental Research Analyst, Anand Rathi Shares and Stock Brokers.

Globally, spot gold hit a record high of $2,030.72 in early Asian trade but later dipped to $2,014.41, with the slight retreat attributed to profit-taking. US gold futures rose 0.7% to $2,032.30, according to a Reuters report. Holdings of SPDR Gold Trust rose 0.8% to 1,257.73 tonnes on Tuesday. “Sentiment is positive and we recommend to buy on dips,” Trivedi added.

Analysts expect a further rally in the gold prices owing to a host of factors. US Treasury Secretary Mnuchin said that negotiators will try to reach an overall agreement on a coronavirus relief bill by the end of this week. The US yields have fallen to their lowest further supporting the gold prices. “Market participants will focus on the service PMI number expected from major economies; if reported weaker than expectations than it will lend further support to metal prices,” said Navneet Damani, VP, Motilal Oswal.

Technical outlook

“Bullish outlook will continue and prices may look towards the next target of $2280 as long as it stays above $1980. However, a direct drop below $1880 could negate the outlook and take prices lower,” added Hareesh V.

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