Gold prices in India today fell below the key psychological level of ₹50,000 per 10 grams, extending losses to the third day in a row amid a drop in global rates. At MCX, gold futures hit ₹49,660 at the low of the day. Silver futures were down approximately ₹3% to ₹59,429 per kg. Despite the recent slide, gold is up about 26% so far this year, making it one of the best asset classes this year.
Analysts attribute the recent drop in gold prices to the dollar’s resurgence and uncertainty about the US stimulus package. In fact the gold has fallen ₹6,000 per 10 grams compared to its all-time highs of ₹56,200, struck on August 7 this year.
“The main reason for the fall in gold prices is the rebound in the dollar index, the uncertainty about the next stimulus package by the US government. Since gold is an international commodity and a rebound in the US dollar affects their prices. Additional stimulus is crucial as the Fed chairman said in his testimony to Congress, more public spending will be required to sustain the growth rate, “said Nish Bhatt, founder and CEO of Millwood Kane International .
“Going forward, clarity on fiscal stimulus in the United States, control of the number of COVID cases worldwide or a vaccine will drive gold prices,” he said.
In global markets, gold slid to a six-week low today, with spot prices falling to $ 1,887.35 per ounce.
Analysts also said that the break below $ 1,900 caused some nervousness and short selling in the market.
Positive economic data from the US and concerns about rising coronavirus infections in Europe and Britain pushed the dollar index to an eight-week high, toning down the appeal of bullion as an alternative to the dollar.
Unprofitable gold is often viewed as a hedge against inflation and currency weakness.
On world markets, silver fell 3.3% to $ 23.62 an ounce, after hitting a nearly two-month low of $ 23.04 earlier in the session.
Analysts also attribute gold’s recent correction to profit-taking after its strong run this year. “The rally in gold prices was so pronounced that it outpaced its fundamentals and investors took some money off the table, leading to a correction. Such volatility is normal when the market becomes too one-sided and even a small event triggers a big sale. off, “the national brokerage said in a note. (With contributions from the Agency)
.
