Gold prices have had a volatile run of late and from a price of over $2000 per ounce hit in august last year, spot gold is once again hovering near $1700 mark internationally and on the MCX at around Rs. 47400 per 10 gm levels. Now a recent spike in Covid 19 and dollar's losses have again brought about strength in yellow-metal gold which rose in the month of April amid increase in physical demand for gold.
Another factor that pushed gold prices higher has been the rupee's weakness against the dollar.
Apart from the above here are some of the factors that are seen to push gold prices higher in the short term:
Investors' interest seen picking up
Amid loss in dollar and the US treasury yield and reduced pace of vaccination around the world amid surge in Covid 19 cases, there has been seen increased investor interest.
Notably, the US treasury yield is watched at closely as it provides clues on boroader investor confidence. In a case when the investor confidence is high, bond prices go down and yield surge. At this time, investors feel they can get investments yielding higher returns elsewhere and they don't need to play safe with investments such as gold.
And at a time when the US yield is seen retreating, there is a pullback in the price of gold.
Covid 2.0 wave does not seems to stop:
Amid Covid 2.0 wave in India and third wave in some of the other nations, gold may fair still better i.e. in uncertain situation. In April, dollar's weakness has also lent support to gold prices as there was seen a retreat in the US treasury yield from 14-month high levels. Only a week ago, the dollar held near its multi-week lows as there was a decline in US treasury yield which reduced the currency's interest rate advantage.
Where is gold price set to move?
For restoring economic normalcy, central banks across the globe will maintain accommodative stance while continuing with dovish policy stance. The US central bank infused a stimulus package worth $3 trillion and another $2 trillion infrastructure bill is expected soon.
This liquidity push will make sure that the gold's appeal as a safe haven continues as global stimulus moves, gives a boost to gold prices. We see spot gold prices in the international markets to move higher towards $1,900 per ounce, and MCX gold futures to move higher towards ..50,000/10 grams mark in a month, says .Prathamesh Mallya is AVP Research Non-Agri Commodities and Currencies at Angel Broking.