The primary trend is sideways to moderately bearish on the daily chart of Comex futures.
By Kshitij Purohit
In India, it’s a common mentality to recognize Gold as the safest investment. Amid the festive season, Gold prices have jumped to their best levels in the last few trading sessions. Jewelers are anticipating a significant rise in footfalls and sales in Diwali. In 2021 so far, Gold prices have remained sideways-to-bearish trend as prices sustained around the support level of $1700 multiple times. On the hopes of faster economic recovery and investors’ interest, the yellow metal has delivered better returns so far this year.
The outlook of gold continues to remain marginally bullish near festivals in India. Given the unstable global climate, which is prompting liquidity flows towards the safe-haven yellow metal, gold would definitely play a significant role in asset class exposures. As a part of an investment strategy, strategic asset allocation must be established, taking into account future cash requirements.
Other options include Gold ETFs and Sovereign Gold Bonds, in addition to buying physical gold. Both instruments provide advantages such as a greater yield than actual gold, tax advantages, and assured purity, among others.
The primary trend is sideways to moderately bearish on the daily chart of Comex futures. It could be a trend reversal and shift to bullish momentum if the price breakout above the mark of $1800. The medium-term range should be between $1840 to $1725. On the downside, the key support level is at $1684 – low of June 2021.
In India, MCX Gold’s price remained bearish in Samvat 2077. In the beginning, the Gold price was trading around the levels of 52000. After that, prices dipped to the worst level around March 2021, falling below 44000. In the last few months, the price has remained sideways to bearish around the levels of 46000 to 48000. However, the price has ticked higher in recent times after having support near 45500. The key resistance level should be 48450 and 49500.
At the beginning of the Samvat 2078, gold could be moderately bullish and other precious metals could face hurdles around the resistance level. If the price sustains above these resistances, we may expect more bullish momentum towards 50,000.
A tactical allocation to Gold should be increased in addition to the strategic asset allocation. Taking gold exposure over the ongoing festive season, should be done in the most cost-effective way possible. Since the economy is recovering from the effects of Covid-19, investors may keep cautions while taking any long-term position in precious metals.
(Kshitij Purohit, Lead Commodity & Currency at CapitalVia Global Research. Views expressed are the author’s own.)