Gold prices have now been seeing a free fall as the economy is seen to recover faster than anticipated after pharma majors have announced that their vaccine candidates have been found to be successful in last-stage trial. Other triggers resulting in the price loss is the smooth transition of Joe Biden as well as the recent global rally in stocks, which has spurred risk-on sentiment among investors.
On the MCX, gold prices toppled by a margin trading at above Rs. 48500 per 10 gm and silver. On Tuesday, the decline in gold prices was triggered by sell-off in safe haven assets. "Global equities gained and sent gold lower for the third straight day and pushed it below $1,800 per troy ounce. Dow Jones index tests 30,000-mark amid the return of Jennet Yelen and hope of further QE programs to continue in the next year," Manoj Jain, Director (Head-Commodity & Currency Research) at Prithvi Finmart told a leading business portal.
Factors causing the downside in Gold
1. Reduce safe haven buying
2. Offloading of positions in Gold ETFs
3. Easing of political turmoil in the US
Gold price outlook going forward:
It is widely expected that while gold shall remain highly volatile, the weakness in US jobs data revealed yesterday which led to a fall in US equities, will fuel a rise in gold prices.
Further a longer term call on the precious yellow metal vouches for an upside as the Covid 19 vaccine availability will lead to a fall in dollar index, consequently giving wings to yellow metal gold.
From a trading perspective too Jain recommends "We suggest buying in the gold around 48500 with a strict stop loss of 48280 for the target of 48850 for intraday trading perspective".