Gold prices: Is it start of another rally?

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After witnessing a correction, gold prices have again started their upward trajectory. The yellow metal rose to a seven-week high on April 16 and was on track for their best week since mid-December in terms of gains in prices as the retreating US Treasury yields and a softer dollar bolstered the yellow metal’s appeal. The US dollar has finally allowed gold to step out of its tight trading range. Benchmark US bond yields hovered near a one-month low hit in the previous session, while the dollar edged lower against other currencies.

“In the past three weeks gold increase by 5.40% and was trading around trading at 47,175 levels on Friday. In the international markets, it has breached the resistance levels of $1752 and trading at $1762 per ounce levels,” said Anuj Gupta, Vice President (VP), Commodity and Currency Research at IIFL Securities.

In the past 15 days, the MCX spot gold prices have surged around 6% to Rs 46,648 per 10 grams. Internationally, the prices have gone up by 4% to $1781 per ounce.

Experts are of the opinion that as India is hit by the second wave and central banks across the world continue to pump in more money to support economic growth, prices are expected to go up in the near-term till things stabilise. Accommodative monetary policy tends to weigh on government bond yields, and raise the appeal of non-yielding gold.

In physical gold markets, today in Delhi, the price of 22-carat gold is at Rs 46,150/10 gm, while in Mumbai, it was trading at Rs 44,950/10 gm. The 22-carat gold in Chennai was being sold at Rs 44,190 per 10 gm. In Bangalore, Hyderabad and Kerala, gold price today is Rs 44,000 for 22-carat and Rs 48,000 for 24-carat per 10 grams.

“In physical market premium has been also increased from Rs 1,500 to 2,000 per 10 grams and Gold prices were even being quoted at Rs 49,200 per 10 gram in some cities,” said Gupta.

Pointing at some other global reasons behind the rise in gold prices, Gupta said, ” the depreciation in rupee and geopolitical tension between US and Russia has further triggered the demand of the yellow metal.”

So will the gold prices continue their upward rally and reach previous record highs?

Experts are of the opinion that gold has reached a sort of turning point where we are going to see a recovery in prices.

“We expect that gold may test $1780 to $1800 levels and in India it may test it may test Rs 50,000 levels soon. Till diwali they may re-test Rs 52000 to 53000 levels,”  added Gupta.