Gold has been enjoying a steady run and has outperformed all assets in the current year. With a 19% surge in its rates, and the economy’s slow state wherein central banks are ensuring maximum stimulus for the economy to get back on its feet by lowering interest rates, traders all over the world as well the top gold dealers in India are opining that the upward momentum of gold will continue to run with people scurrying to invest in the precious metal to park their wealth.
According to the bullion king of India, the one factor that will continue to drive gold prices higher in the near term is further weakness in the U.S. dollar as the current embarks on a new downtrend.
Gold is typically seen as a “safe haven” asset in times of uncertainty because it is less volatile than other investments, like stocks. What’s more, the metal moves inversely to the U.S. dollar, meaning that when the greenback moves lower — as it has done lately — gold moves higher.
Gold is benefitting from the geopolitical situations and the pressure that has been created worldwide.
Globally, gold prices edged lower on Monday due to a stronger US dollar, but worries over surging Covid-19 cases and its impact on the global economy kept the safe-haven metal above the psychological level of $1,800 per ounce.
Though gold was struggling to keep momentum above $1800, analysts believe that market has a lot of upwards potential and support for gold.
The gold market is consolidating above $1,800 an ounce and although bullish sentiment has fallen from record levels, market analyst and retail investors remain bullish on prices next week.
Major economies have been struggling on the path of development and are constantly announcing new stimulus measures to support the economy. The virus continues to weaken the global scenario, but U.S and Europe have been trying to pump in fiscal stimulus to keep the growth going. This step will weigh on the U.S. dollar and support gold prices.
Although there is strong sentiment in the marketplace, some analysts and industry insiders from RSBL have noted that a correction would be healthy following break above long-term support.
U.S markets are languishing for the past 2-3 days and with no major economic data expected till Wednesday, gold and silver are expected to maintain the same stance- mild pull back and positive momentum.
Small dips can be considered as an opportunity to add gold to your portfolio confirms Mr Prithviraj Kothari of RSBL.
The precious metal has reached a new range of $1,750-$1,830 in July, up from the May-April range of $1,668-$1,750,
If gold break the upside, then $1,850 and even $1,900 is possible.
Right now, gold is consolidating but we can see higher prices next week as major data is expected to be released after Wednesday.
- U.S House price index
- U.S. existing and new home sales
- U.S latest jobless claims
- U.S Manufacturing PMI
All the above-mentioned data is important and needs observation as it will give investors an idea whether we are seeing an actual recovery or not.
Currently gold prices are benefiting from
- loose monetary policy,
- low real yields,
- record inflows into exchange-traded funds
Industry experts and veterans like Prithviraj Kothari continue to predict an all-time boom of gold prices in the coming six to nine months with a 30% probability that the prices will reach $2,000 an ounce in the next three-to-five months.
If gold can break the $1,829 resistance, then the precious metal could be heading for its all-time highs.