Gudi Padwa and Akshaya Tritiya are considered auspicious for buying gold and silver, but the second wave of covid, especially in Maharashtra, has clouded demand outlook for precious metals
Prices of gold and silver have been falling significantly from their respective peaks. On the MCX, spot gold prices were flat at ₹46,464 per 10 gram on Tuesday, after a two-day decline. Prices of silver rose marginally to ₹66,300 per kilogram.
Commodity analysts warn of further weakness in domestic prices of the two precious metals in the near-term. Even as prices are down, retail demand for gold is unlikely to meaningfully improve despite the festive and marriage season, analysts added.
Hindu festivals such as Gudi Padwa, Baisakhi and Akshaya Tritiya are considered auspicious for buying gold and silver. However, the second wave of Covid, especially in Maharashtra, has clouded demand outlook for precious metals. Given the surge in active cases, expectation largely is that there may be another lockdown in the state. Analysts say, uncertainty on employment in the backdrop of the pandemic, has dampened sentiment towards precious metals.
Also, a rebound in US bond yields and firming US dollar has also added to some pressure on prices of safe-haven asset gold in the international market. Since gold is a non-interest barring asset, higher bond yields increase the opportunity cost of holding gold. In global market, prices of spot gold fell marginally compared to its previous close, to $1728.15 an ounce. Silver prices stood at $24.69 an ounce.
Analysts say, even though global central banks continue to assure of a benign interest rate scenario, with increasing pace of vaccination globally, expectations of a faster economic turnaround could keep global gold prices range-bound.