Uncertainty over US stimulus package and optimism about progress in covid vaccine has dented gold prices in recent days
Analysts say gold rates may remain choppy in short term but buying support may emerge at lower levels
Gold prices continued to struggle in Indian markets for fifth day in a row amid weak global cues. On MCX, gold edged up 0.11% to ₹50,029 per 10 gram after suffering losses in the previous four sessions. Silver futures rose 0.3% to ₹61690. In the previous session, gold prices had fallen 0.7% or ₹350 per 10 gram while silver had declined ₹1,000 or 1.63% per kg.
In global markets, gold prices edged lower today amid uncertainty over more US stimulus measures. Spot gold fell 0.2% to $1,863.21 per ounce. Among other precious metals, silver fell 0.1% to $24.06 per ounce while platinum was down 0.2% to $949.88 per ounce.
Investor optimism over covid vaccine progress had lifted global equity markets to an all-time high earlier this week. But the risk-on rally has fizzled out amid a surge in virus cases and deadlock in the US over stimulus measures.
US Treasury Secretary Steven Mnuchin said lawmakers should redirect unspent stimulus funding, including money he’s pulling back from the Federal Reserve, to buoy the economy as the U.S. waits for a coronavirus vaccine. Earlier, he’d requested the return of unused funds from the Fed’s emergency pandemic lending program, triggering pushback from the central bank, which said the programs served a vital role.
Gold ETF investors continued to remain on the sidelines. Holdings in SPDR Gold Trust, the world's biggest gold-backed exchange traded fund, fell 0.14% to 1,217.25 tonnes on Thursday.
"Gold has come under pressure after failing to break past the $1900/oz level. Weighing on gold price is progress in vaccine trials for COVID-19. A number of companies have reported progress in trials in last few days however these are still preliminary readings and there is not much clarity on how soon a vaccine can become available publicly," Kotak Securities said in a note.
"Also weighing on gold is uncertainty about US fiscal stimulus."
Meanwhile, the International Monetary Fund and Group of 20 nations warned that fresh restrictions on households and companies due to the resurgence of Covid-19 are a risk to the global economic recovery.
Gold prices may remain choppy in short term but "we expect buying interest to emerge at lower levels as global risks are intensifying," Kotak Securities said.
On silver, Kotak Securities said rising virus cases has also dented outlook for demand from industrial sector.
"ETF outflows also show weaker investor interest. However, supporting price is general optimism about Chinese economy as government intends to continue with stimulus measures to boost growth. As per Silver Institute’s interim review, the pandemic has impacted both demand and supply for silver however investor interest has remained strong. Silver may struggle for direction along with gold amid mixed factors however we expect price to remain supported by hopes of continuing stimulus measures and hence one could consider buying at lower levels," the brokerage said.
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