Gold prices were struggling in the domestic market

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Gold Prices Today, Gold Price Outlook, Gold Price Forecast: Gold prices were struggling in the domestic market on Thursday, even as yellow metal in the international market hovered near five-month high due to a pullback in the U.S. Treasury yields. On MCX, gold August futures were trading Rs 59 down at Rs 49,542 per 10 gram, as against the last close of Rs 49,601. Silver July futures were trading firm, up Rs 82 at Rs 72,760 per kg. In the previous session, silver futures settled at Rs 72,678 per kg. In tandem with international trends, MCX gold has posted gains for the third consecutive month in May. MCX gold has risen 5.58 per cent in May, 4 per cent in April and 2.87 per cent in March this year, while on a year-to-date (YTD) basis, MCX gold has fallen 1.09 per cent.

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“The two primary forces that helped gold in gaining strength in the month of May are dollar weakness and data indicating an uptick in inflation. Treasury yields have also been subdued which further aided gold,” Bhavik Patel, Senior Technical Research Analyst, Tradebulls Securities, told Financial Express Online.

In the international markets, at $1,852 per troy ounce, gold enjoyed its highest valuation since January 2021 and prices were sharply higher than the monthly average of $1,761 per troy ounce for the preceding month of April, said CARE Ratings. In May, gold gained strength due to growing inflationary fears, a weak US dollar and the cryptocurrency crash of May 19, 2021. Domestic gold prices include a 7.5 per cent import duty, a 2.5 per cent agricultural cess and a three per cent GST. Gold prices averaged Rs.47,921.1 per 10 grams during the month, the highest since January 2021.

What do charts say for MCX gold?

The yellow metal has breached the down sloping channel pattern on the weekly chart along with its 200-day SMA at 49100 levels. “This breakout has triggered conviction in bulls that the trend may further go up,” Rajesh Palviya, Vice President — Research (Head Technical & Derivatives) at Axis Securities, told Financial Express Online. He said that the chart pattern indicates a target of Rs 55,500 and next target is above Rs 60,000 (as per Elliott wave it suggests a rally towards Rs 64,000). “Only a fall below 45000 would negate our bullish view,” he added.

Where is MCX gold headed in near term?

Analysts believe that there should be a correction of 3-4 per cent before moving towards all time highs. In the near term, we expect some reversal in gold prices,” Rahul Gupta, Head of Research-Currency at Emkay Global Financial Services, told Financial Express Online. He added that the yellow metal needs to trade above Rs 49,600 consistently to extend the current upswing towards Rs 49,725-49,900 areas. Those at Tradebulls Securities, expect MCX gold to test Rs 51,500-52,000 in near term. “MCX gold target for Diwali 2021 is around Rs 52,000 per 10 gram,” Bhavik Patel said.

Should you buy, hold or sell gold?

CARE Ratings in a report said the demand for gold may pick up once the lockdown restrictions ease, but the pick-up is unlikely to be strong given that gold prices are unlikely to scale down significantly. The demand for physical gold remained negligible during May as most jewellery stores remained shut due to intermittent lockdowns across states and the high international gold prices.

Bhavik Patel advised those who have already bought gold should hold till Rs 52,000. He said that fresh investments should only be made around Rs 48,000. “From current levels, we would recommend to wait for some dip before buying fresh,” he said.

Rahul Gupta said that for the short term, ‘sell on rise’ is recommended. While for long-term, any dip will be a buying opportunity as the view still remains bullish towards Rs 52,000. A dip towards Rs 49,480-49,400 will be seen until prices trade below resistance. “Any major downside will be triggered towards Rs 48,000-47,500 only if prices close below Rs 49,150,” he said.

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