Gold after seeing a surge in the price witnessed a dip this week. The fall of around 0.3% did not deter the sentiments of investors. People are positive about gold continuing its positive streak – a news confirmed by the top gold dealer in India. But still sentiments remain positive. Growing concerns over US China Trade war, escalating Sino-India tensions along with the ongoing Covid widespread- all these together have helped gold in maintaining its price range and has further supported positive sentiments for the same confirmed Prithviraj Kothari of RSBL.
On one hand gold witnessed buyers at $1710 -$1750 levels, while it also some jumping into the selling bandwagon. Gold seems to have attained a balance between geopolitical and COVID-19 concerns on one side, and economic recovery hopes and dollar strength on the other.
The ongoing US-China Phase One trade deal is expected to be cut off. With U.S. President Donald Trump continuing his barrage of threats on China issued a new threat on Thursday. President Trump has threatened China off cutting all ties with it despite talks among top diplomats being held with Beijing among souring relationships. China has told state-owned firms to halt purchases of major US farm products, after Washington said it would eliminate special treatment for Hong Kong.
While this was on the global front, on the local front we saw widespread protests in the United States over racism. Furthermore, concerns of another wave of coronavirus cases has created panic. More than 8.38 million people have been reported to be infected by the coronavirus globally with China reporting 32 new virus cases on Friday, 25 of which were reported in the capital city Beijing.
A surge in fresh infections in several U.S. states and the imposition of travel curbs in Beijing to stop a new outbreak have renewed fears of a delay in economic recovery as countries reopen after coronavirus-induced lockdowns
Adding to this were, simmering geopolitical tensions between North Korea and South Korea, and India and China also offered some support to bullion , which is often used as a safe-haven investment during times of political and financial uncertainty.
Further, in UK too gold was seen moving upwards. There was decent stimulus being pushed into the market wherein the Bank kept overnight UK interest rates at their new record low of 0.10% and also approved another £100bn ($124bn) of quantitative easing, taking its total holdings of government bonds to £745bn – equal to one-third of GDP and 42.5% of the UK state’s current outstanding debt in issue.
In the US too, negative growth sentiments was supporting gold. The Federal Reserve is targeting 2% inflation and has pledged to keep rates near record lows until the goal is achieved. This will lead to a lift in gold prices. Looking at the dollar, we saw the greenback falling to its lowest since mid-March, further supporting bullion prices the bullion king of India, Prithviraj Kothari stated.
News coming in from various parts of the world, which is mostly negative on the geo-political and economic front, will definitely prove to be positive for gold and hence we can expect fresh highs for the yellow metal.