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GOLD RATE TODAY :
Gold prices in India has been on a record-breaking streak in India, hitting a excessive of ₹50,700 per 10 gram in futures commerce in India. On the opposite hand, silver has rallied strongly over the previous few days, hitting a multi-year excessive of ₹62,400 per kg on MCX. Gold prices in India are up about 30% up to now this year amid a world rally. Analysts say that rising coronavirus circumstances, US-China tensions, hopes of recent stimulus and a weak greenback have supported the rally in the yellow metallic.
“Gold continues to hit new highs supported by weaker US dollar, strong investor buying, increased geopolitical tensions, rising virus cases and hopes of additional stimulus measures. The US dollar index has slumped to March lows weighed down by reduced safe haven buying and diverging virus and economic situation in US and Europe,” Kotak Securities stated in a word.
In international markets, spot gold was 0.6% increased at $1,882.17 per ounce, it highest degree in about 9 years. Silver traded round $22.84 per ounce.
European Union leaders earlier this week agreed on a large stimulus of over $850 billion whereas US policymakers are struggling to achieve a consensus on extra stimulus measures.
In addition,”US virus cases are increasing at a much faster pace than European nations,” says the brokerage on the greenback’s weak spot.
ETF traders proceed to pour cash into gold amid expectations that governments could proceed to infuse extra liquidity to spice up financial development. Indicative of investor sentiment, holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund or gold ETF, rose 0.4% to 1,225.01 tonnes on Wednesday, its highest since March 2013.
On geopolitical entrance, tensions between US and China rose additional after Washington US gave China till Friday to shut its consulate in Houston.
Risk factors
“Gold could overshoot much higher to the upside but the subsequent decline will be quite dramatic as well… As more economies reopen and return to normal activity, the economic data improves then there will not be much need to pile up in gold,” Reuters cited Bank of China International analyst Xiao Fu as saying.
The largest danger issue for gold’s rally is that report excessive prices could additional weaken client demand in India, says Kotak Securities. Gold demand in India, the world’s second largest client, has taken a beating amid the coronavirus disaster.
“After the breakout earlier this week, gold has managed to hold above the $1850/oz and is likely to move towards the key $1900/oz level. Price may remain higher unless we see a significant recovery in US dollar or some profit booking by ETF investors,” Kotak Securities stated.
Meanwhile, “silver has rallied sharply in previous couple of periods because it has benefitted from concurrent positive factors in gold and industrial metals and powerful investor shopping for,” Kotak Securites stated.
“Industrial metals benefitted from weaker US dollar. However US-China tensions and virus risks kept a check on prices. Meanwhile, silver’s rally is also challenged by weaker demand outlook due to sluggish industrial activity globally. Silver continues to remain on path to test the key $24/oz level,” it stated.
“There is a possibility that some market players may choose to book profit. Hence, we recommend some caution and one should wait for a corrective dip to create fresh long positions. “
What to look at
“Focus may continue to be US and European economic data and development relating to virus outbreak, US-China tensions and stimulus measures which may affect US dollar as well as general risk sentiment and thereby bullion prices,” the brokerage stated.
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