Gold prices fall over Rs 11,000 from all-time high, Check Details Here
Gold prices in India edged lower in Tuesday’s session as analysts believe that risk-on sentiment on prospects for stimulus and vaccine-fuelled economic recovery have dimmed the appeal of safe-haven assets.
On MCX, gold April futures were trading Rs 208 or 0.46 per cent down at Rs 45,100 per 10 grams. While silver May futures were seen ruling at Rs 67,903 per kg, down Rs 897 or 1.03 per cent.
Gold on Multi Commodity Exchange hit a record high Rs 56,191 per 10 grams in August 2020, since it has tumbled Rs 11,901 or 20 per cent, to trade below Rs 46,000-mark.
Ajay Kedia, Director, Kedia Advisory, said that even as bullion prices dropped in Tuesday’s session, expectations of increased industrial demand have been limiting further losses.
According to Ajay Kedia, MCX gold’s support lies in the range of Rs 44,500-44,600 as weakness in the yellow metal prices in India is attracting physical buying.
Increase in US bonds yield and its impact on gold prices
Surendra Mehta, the national secretary of the India Bullion and Jewellers Association (IBJA), has said that the biggest reason for the fall in gold prices was the dollar strengthening against other big currencies. The US dollar index has strengthened against major currencies. The US dollar and gold are negatively correlated, therefore as demand for the American currency goes up, the price of the yellow metal comes under pressure. US bond yields have also risen causing a correction in gold prices.
Investors can earn strong profits from gold at current prices
Mehta said that after the beginning of the vaccination drive against the coronavirus disease and a spurt in economic activity, people are now turning to more risky investment options for stronger profits. These include options such as equity and cryptocurrency. People are also looking to invest in riskier assets such as equities and cryptocurrencies.
However, Mehta feels this correction is likely to be short-lived and people should use this as an opportunity to bet on e gold. The current rally across assets such as equities is powered by liquidity and is unlikely to last long. If equity markets correct, people will again get into gold as it is a safe haven asset.
Also, the US is expected to announce a further stimulus package anytime soon which may drive gold prices higher. He feels that gold prices may again touch a high of $1960 per ounce in the next 3-4 months that is around $150 above its current level.
(With Inputs From Agencies)