Gold Price On Course Of Its Third Weekly Decline: Will The Decline Continue?

On Friday (November 27, 2020), gold prices in India have gained by a tad on the MCX after a good decline on Tuesday as doubts over the US President's smooth transition to the White House and positives over the Covid 19 vaccine weighed.

Nonetheless in the current landscape, prices have rather remained steady on doubts over the efficacy of the inexpensive vaccine to treat or prevent the lethal virus.

Spot gold was little changed at $1,810.75 per ounce by 0118 GMT. U.S. gold futures rose 0.2% to $1,809.80 per ounce.

For the week, the decline in dollar terms has been huge to the tune of 3 percent. And coming back to India, considering the current future prices of around Rs. 48600, prices have corrected almost Rs. 8000 from peak highs touched in August this year.

So, gold price drop is largely a temporary phenomena, and stimulus measures and other will boost up the prices

Stimulus tap being opened worldwide gives a boost to gold prices and there is a call for more of stimulus by the European Central Bank too.

Nonetheless, what cannot be ignored here is that while historically we have seen perform gold good in price terms during inflation. In prolonged deflation, their exact impact on gold prices cannot be known. So, by and large while countries will prevent such situations to occur, some of the economies do hint such as Tokyo do hint of a heightening deflationary pressure on the economy.

So, from an investment perspective, higher investment into gold above the suggested 10% allocation should be avoided for preventing any unusual situation.
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