Gold costs fell in Indian markets on Thursday, mirroring weakness in international trends amid increasing US bond yields. On MCX, gold April futures have been trading Rs 87 or .19 per cent down at Rs 44,861 per 10 grams. While silver May futures have been observed ruling at Rs 67,497 per kg, down Rs 503 or .74 per cent. MCX gold has been falling due to increasing 10-year bond yield which is at the moment at 1.45 per cent. US Dollar index, which is above 91, has also been hurting investor sentiment. On a week-on-week basis, the yellow metal has tumbled roughly 2 per cent. Following powerful gains in 2020, increasing 28.23 per cent in MCX, the yellow metal has been reeling below stress amid volatile equity markets and increasing bond yields. From a record higher of Rs 56,191 per 10 grams in August 2020, MCX gold has tumbled Rs 11,330 or 20.16 per cent. While on a year-to-date (YTD) basis, gold has plunged Rs 5,417 or 10.78 per cent.
Jigar Trivedi, Fundamental Research Analyst, Anand Rathi Shares and Stock Brokers, told TheSpuzz Online, that the SPDR Gold ETF has witnessed liquidation for the 12th straight session. COMEX gold was observed trading reduced close to $1710/oz just after a one per cent decline in the prior session. Now the concentrate has shifted to Fed Chair Powell’s virtual speech tonight for more cues.
Gold has been facing the dual challenge of increasing bond yields and a powerful US Dollar. Positive investor sentiment that the U.S. economy will see a stronger-than-anticipate recovery is pushing the U.S. dollar index above 91, its highest level in 4 weeks, says Bhavik Patel, Senior Technical Research Analyst, Tradebulls Securities. “Market is near its 55 month moving average of $1707 and below $1700 we cannot rule out further slippage till $1680-$1650,” Patel added. He also stated that rallies will want to regain only above $1,760 which is the May higher and prior 50% retracement. Patel stated hunting at sharp downside rally, some technical bounce back might not be ruled out from existing levels ahead of promoting resumes
Gold costs in India have declined beneath Rs 45,000 per 10 grams, due to larger margins as compared to COMEX gold costs. COMEX Spot gold costs are holding help at $1690 per ounce. Tapan Patel, Senior Analyst (Commodities), HDFC Securities, told TheSpuzz Online that the threat on investment sentiment due to vaccine rollouts has dampened investment demand for yellow metal.
Time to acquire, sell or hold the gold?
Bhavik Patel stated that the next help for gold comes about Rs 44,500-44,200. The most recent stimulus measures are bullish for gold in the extended-term as they are anticipated to push inflation larger but in the quick term, gold is nevertheless struggling. “We believe one should still hold their position in gold but for taking fresh positions either wait around Rs 44,200-44,000 or once gold sustains above Rs 45,500,” Bhavik Patel stated.
On the other hand, Tapan Patel from HDFC Securities has advised quick-term traders to adopt the ‘sell on rise’ method. While extended-term investors can hold their extended positions and add more on decline towards the Rs 44,800-44,500 variety.
Even as the trend appears bearish, Jigar Trivedi from Anand Rathi sees it a superior level to begin accumulating. “There is further pain in price but jewellery demand will provide support around Rs 44,600-44,400,” Trivedi added. While Ajay Kedia, Director, Kedia Advisory stated that traders need to prevent calls as volatility is higher. However, investors can look to accumulate as costs are practically down by Rs 11,500 per 10 gm.
(The views and investment ideas in this story are expressed by the respective professionals of analysis and brokerage firm. TheSpuzz Online does not bear any duty for their tips. Please seek the advice of your investment advisor ahead of investing.)