Gold has been gaining for three day's now on the MCX and in the previous session it scaled to a high of Rs. 49490 and settled at Rs. 49300 per 10 gm.
And here is why gold is yet to run up more:
Progress in US bailout package:
There has been progress in the dole out of US stimulus and amid it gold's appeal as being a hedge against inflation has come to the forefront.
Senate Republican urged the Congress to pass the spending bill worth $14 trillion that includes relief package for fighting coronavirus.
Also European Union is likely to offer a stimulus to relieve the effect of the Covid 19 economic fall out.
Now even as the penchant for risky assets has increased amid recovery hopes:
This is Why Gold Still Holds Upside
"While we may not see sharp uptrend, as in August, gold could start moving up again if the spike in the number of Covid cases continues in the US and other big economies," Mathur, director of commodities and currencies, Anand Rathi Share & Stock Brokers said.
Also the optimism due to Covid 19 vaccine may soon fade away as the vaccine shall not be available to the public before mid-2021.
According to Chirag Mehta, senior fund manager-alternative investments, Quantum Mutual Fund, "A vaccine won't overnight undo the extraordinary economic damage caused over the past few months."
Also to support is the dollar which continues to see downside on stimulus hopes and has now retreated to 2.5 year low.
Continuing low interest rate regime across the world will also favour gold prices. And US government has already announced that it will keep interest rates near zero until 2023.
What investors should do?
Any correction gives a good entry point in the precious yellow metal and if your portfolio allocation in the metal is 5-10% or below you can surely accumulate it and may be by it in tranches to get the averaging benefit price wise.