Gold Price Analysis : Some analysts believe the precious metal may lose some more as rising yields and better than expected success in vaccination drive will lead money out of the non-yielding bullion. However, low level buying and wedding demand may provide some support.
“The vaccination process is too swift. We have also seen better recovery in the dollar index and treasury yield, which has a negative correlation with gold. Until we do not see some softening of yield, we should not see upside in gold price,”.
- Gold witnessed some heavy selling on Thursday and dived to near three-week lows.
- Attempted recovery move might now confront stiff resistance near the $1848-50 area.
- The technical set-up supports prospects for an eventual break below the $1800 mark.
Gold maintained its offered tone through the first half of the European session and was last seen trading around the $1815 region, just above near three-week lows set earlier this Thursday.
Given this week’s breakthrough a short-term ascending trend-line, a subsequent weakness below the $1830 horizontal levels supports prospects for a further near-term depreciating move. Hence, a fall back towards challenging 2021 lows, around the $1800 mark touched on January 18, looks a distinct possibility.
Meanwhile, technical indicators on the daily chart have been gaining negative momentum and are still far from being in the oversold territory. Hence, some follow-through selling below the mentioned level might be seen as a fresh trigger for bearish traders and pave the way for an extension of the downward trajectory.
The next relevant target on the downside is pegged near the $1787-86 area before the gold eventually slide to test November 2020 swing lows, around the $1765-64 region.
On the flip side, the $1830 level now becomes immediate resistance. Any further recovery might be seen as a selling opportunity and remain capped near the ascending trend-line support breakpoint, around the $1848-50 region. The latter coincides with the very important 200-day SMA and should now act a key pivotal point for short-term traders.
Will gold prices fall?
In the international market, she believes that $1,764 should provide good support. In India, she said the short term target should be Rs 46,800 with ultimate downside target at Rs 46,000. If this target is achieved, this means gold will fall 3.5 per cent from current levels of Rs 47,600.
Any recovery in prices, which is less likely given the fundamentals, should be capped at Rs 49,200. Dealers believe increased demand for physical gold, ETF buying and exports will lend some support to prices in coming months.
The demand for physical gold has already surpassed pre-Covid levels but the tax cut has not led to any instant demand in the physical market.