As seen in the monthly chart, MCX Gold continued to rally for the 7th consecutive month and the counter hit an all-time high of 48982 levels
Gold prices fell over Rs 850 from a fresh record high of Rs 48,982 on MCX in Thursday’s trade following weakness in the international market as equities rose on optimism over a potential coronavirus vaccine. Pfizer Inc said that one of its Covid-19 vaccines showed encouraging results in very early testing of 45 people, which lifted investors’ appetite for riskier assets. On MCX, gold August futures fell Rs 151 to Rs 48,116 per 10 grams, while silver September futures were ruling at Rs 49,162 per kg, down Rs 262. “After hitting fresh all-time high in MCX, gold prices retraced back on account of strong US ADP Non-Farm payroll data yesterday. We expect volatility to be high today and it would take a close below 47,000 in MCX to support a potential top,” Bhavik Patel, Senior Technical Research Analyst at Tradebulls Securities, told Financial Express Online.
So far this year, Gold prices on MCX have surged around 25 per cent. “The bullion surged over 13% last quarter due to fears of a second wave of infections and as global central banks have bumped up stimulus measures and kept interest rates low to ease the economic blow from the pandemic,” Ajay Kedia, MD, Kedia Advisory, told Financial Express Online.
A host of factors such as escalating geopolitical tensions between India-China, US-China and US-European Union, concerns of a quick global economic recovery, fears of coronavirus and a weak US dollar, among others, have boosted the safe-haven appeal. “Moreover, a rise in crude oil prices and a hike in gold ETFs holdings, provided support to the gold price. MCX Gold has witnessed gains of almost 13% in Q1 FY21 and touched a high of Rs.48825/10 gms in June,” said Rahul Gupta, Head of Research-Currency at Emkay Global Financial Services.
Gold prices to touch Rs 52,000 in next 6 months
As gold prices in India have gained 27 per cent from March lows, analysts believe yellow metal prices will hit Rs 52,000 per 10 grams in the next six months from now. Ajay Kedia explained that in July and Aug, there will be a drop till 45000-45500 while year-end looks firm till 52k.
What should be investors’ strategy for gold?
As companies all over the world are busy developing a vaccine for COVID-19 pandemic, gold prices are expected to correct. Any news related to the coronavirus vaccine will dent the investor sentiment. “As seen in the monthly chart, MCX Gold continued to rally for the 7th consecutive month and the counter hit an all-time high of 48982 levels,” Rahul Gupta added. He further advised investors to buy gold in tranches and not in one go.”As gold is expected to witness a correction, hence we would suggest investors to go for buying in a staggered manner. Buy 25% at current levels around 48200 then another 45% at 47535 and the remaining can be bought within 46710,”
While Bavik Patel has recommended investors to wait for dips before committing to any positions, in the light of upcoming economic data. “The underlying tone is still bullish and we recommend investors to take fresh positions post Non-Farm payroll data as that will filter out the noise created by speculators,” Patel added.
Key triggers for gold going ahead
“The ongoing geopolitical tensions around the globe and any escalation in tensions or any negative news regarding coronavirus will boost safe-haven demand for gold and once it crosses and sustains above 49000 then 49750-50600 is expected,” Gupta said. He also added that if gold prices fall below 47000-mark then a slip towards its previous month low of 45421 is expected.