Gold prices at a record 8-month low

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Owing to a weak global market trend, Gold prices happened to fall again for the fifth straight day in India while the US Dollar and Treasury yields surged. Several factors are causing the dip in gold prices such as import duty cut in the Union Budget 2021, inflation expectation, high energy prices, record-high equity prices and progress in Joe Biden’s stimulus plans, continuing ETF outflows, and a sharp correction of platinum prices. Gold April futures in MCX, were trading Rs 147 or 0.31 percent down at Rs 46,752 per 10 gram while silver March futures were at Rs 69,456 per kg up Rs 84 that is 0.12 percent on Multi Commodity Exchange. In August of 2020, MCX Gold hit an all-time high of Rs 56,1991 per 10 grams but after that, it plunged Rs 9,400 or 20 percent and had to trade below the crucial Rs 47,000.

Prices of Gold after dropping below $1800 to nearly two weeks low o strength in the US Dollar and rise in US Treasury Yields, appeared to recover from their position by the start of February to test their recent high of $1872. Globally, spot gold reached $1791 per ounce while US gold futures slipped to $1788.40. With the announcement to cut base customs on gold and silver in the Budget in India, gold prices are expected to reach $1760.

Future of Gold Prices

The gold prices are expected to test levels of RS 45,700-Rs45600. While Jigar Trivedi of Anand Rath Shares and Stock Brokers believes gold prices may trade in a range of Rs 45,000- 45,500 in the coming sessions. He has also advised the investors to buy on dips as these are expected to rise in 2021. With the rollout of vaccines and the resultant optimism in the economy, there has been some liquidation in yellow metal with risk-on sentiments. The overall trend for gold is still bullish with an expectation of Rs 58000 per 10 gram in long term. The expansion of balance sheets from major Central Banks and ultra-low interest rates are the key drivers for the demand for gold which will do the job of keeping downside limited.

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