Gold amid the coronavirus pandemic led economic fall-out saw huge gains last year and on the MCX it hit levels of Rs. 56200. Nonetheless most of the gains have been pared in 2021 on economic recovery and calls around major central banks considering pulling back of the monetary stimulus as well as increasing risk-on sentiment.
But gold price is now seen to be recovering losses and is seen gaining to key psychological levels of $1800 per ounce.Last gold futures December 2021 was seen up by 0.25 percent at $1774 per ounce. Likewise spot gold traded at a similar price with gains of over 0.31 percent.
Current gold price trend
In the early trade today gold prices remained rather steady discounting in the fact of the probable unwinding of the stimulus which shall weigh on gold prices.
"Gold is trading above what we deem as fair value at this moment, and I believe this premium is due to the market pricing inflation fears," said Howie Lee, an economist at Oversea-Chinese Banking Corp. "With the Fed due to begin monetary normalization, I still believe gold will face more downward pressure in the coming year."
Factors that may lend support to gold prices in the near term
Nonetheless, sentiment back home remains promising for gold given few of the factors such as
1. Postponement of the withdrawal by the Fed Reserve to begin tapering and calls on this shall be likely known sooner.
2. Prices have fallen substantially and hence providing an impetus to demand. Evident through gold imports in India gaining substantially month on month.
3. Rupee weakness has been another trigger.
4. Inflation-the global concern is also pushing investors' to hedge their investments.
Experts suggest that the buying in gold shall provide support while that for silver there is seen uneven recovery. For the precious yellow metal, gold prices are said to hit Rs. 48200 per 10 gm by Diwali and one can initiate trade at Rs. 47300.
Subdued dollar has been lending support to the gold, but in the near term gold will also face some of the headwinds such as the rising US yield, which diminishes the appeal of the safe-haven gold and any monetary tightening steps by global central banks.
Gold price outlook for the last quarter of Cy 2021
Earlier Bank of America in August this year suggested that given the holding pattern in gold, it could get a push to $1900 per ounce level."In its latest forecast published Thursday, Bank of America expects gold prices could push to $1,900 an ounce at the end of the year," a Kitco News article noted. "However, it expects the average price to come in around $1,800 an ounce in the final three months of the year. The fourth quarter could be the highwater mark for the precious metal as the bank sees prices gold steady at around $1,800 an ounce through the first half of next year."
Now in the current scenario, for the bull case to persist in gold, the XAU/USD needs to surpass 50-DMA at $1779. XAU is The ISO 4217 standard code for one troy ounce of gold, considered as a currency."It remains to be seen if the yellow metal manages to extend the recent gains, as the rally in the global yields will likely continue amid hawkish expectations from the key central banks, including the Fed and the BoE."
"The 14-day Relative Strength Index (RSI) is trading flattish above the midline, backing the renewed upside. However, the bear cross confirmed on the daily sticks on Tuesday warrants caution for gold bulls. The 100-DMA cut the 200-DMA from above flagging a bearish signal."
"XAU/USD is likely to face resistance once again at the horizontal 50-DMA at $1779. A sustained move above the latter could call for a retest of the 100 and 200-DMAs confluence zone at $1794. A sustained break above the latter could expose the $1800 round number."