Gold prices gain today amid rising COVID-19 cases; may trade in this range by year-end

Gold prices gained in Tuesday’s session due to rising coronavirus cases which pushed investors to seek a safe-haven appeal. Following the second wave of COVID-19 cases across Europe and the UK, there is a possibility that the UK could impose a second lockdown to contain the spread. On MCX, gold October futures were trading firm, up Rs 95 or 0.19 per cent at Rs 50,566 per 10 gram while silver December futures were up Rs 334 or 0.54 per cent at Rs 61,650 per kg. In the previous session, MCX gold fell 2.41 per cent and silver crashed 9.67 per cent. Analysts say that gold prices got crushed yesterday following a global sell-off in equity markets. “US Dollar strengthened (trading near six weeks high) amid broad risk-off as rising cases of infection in Europe might prompt the government to initiate lockdown once more. The rally in gold and silver were showing signs of stalling as gold was unable to move beyond $1975 while the US dollar continued to be resilient in spite of rising equity markets,” Bhavik Patel, Senior Technical Research Analyst at Tradebulls Securities, told Financial Express Online.

Adopt buy on dips approach

Bhavik Patel also added that despite the recent selling pressure, gold continues to look strong in a longer time frame as fundamentally not much has changed. “I would advocate buy on dips around Rs 49, 000 on MCX as I find more value there,” he added. Despite recent corrections, Patel doesn’t feel a need to jump into trade immediately. “Let the price settle above $1933 before taking long positions. We expect gold to trade in the range of Rs 52000-53000 by year-end,” he said. The bearish bias in gold will remain intact till gold has not breached $1933 on the upside. Any further sell-off may come till $1870 if gold breaks down below $1900.

Yesterday, gold and silver tumbled tracking weak overseas prices. “Technically, MCX Gold October gave a sharp correction below its 21-Daily Moving Average which is placed at 51400 levels below which will continue downside momentum up to 49800-49500 levels,” said Sriram Iyer, Senior Research Analyst at Reliance Securities. Resistance holds at 50700-50900 levels. MCX Silver December contract corrected more than 10% and is trading around 61550 levels indicating a negative trend to continue 58600-56000 levels.

Globally, gold prices rose today following a 3.4 per cent in the previous session, due to the strength in the dollar. While economic concerns over fresh rounds of coronavirus-induced lockdowns across Europe also helped buoy the metal. Spot gold rose 0.3 per cent to $1,918.20 per ounce. US gold futures gained 0.6 per cent to $1,921.50 on Tuesday. Among other metals, silver gained 1.1 per cent to $25 per ounce, platinum was up 0.6 per cent to $886.20 and palladium rose 0.5 per cent to $2,285.44. According to the Kotak Institutional Securities report, global financial markets continue to witness sharp volatility as market players assess rising virus cases, increasing US-China tensions, uneven economic recovery and Brexit uncertainty against progress on the vaccine front and hopes of continuing stimulus measures. “We have seen added volatility in the last few days as the rally in equity markets halted,” it added. The trend in the US dollar remains a key price-determining factor for commodities.