Will Gold bounce back this week? : Gold prices have recently corrected from their alltime high level of Rs 56,200 per 10 gram to Rs 47,500 per 10 gram. However, the prices bounced back to Rs 49,000 per 10 gram level as the USdollar touched a 2.5-year low, backed by hopes over US Covid19 stimulus aid. Backed by positivity on vaccines, a raging bullmarket in equities is also putting pressure on the yellow metal.
Will gold prices go up in 2021?
However, long term fundamentals still indicate that a bounce back in gold prices is around the horizon. Factors like lower interest rates, negative US real yields, hopes over mega stimulus packages to overcome the impact of Covid-19 and the trajectory of the dollarindex will remain in focus for the next 6-12 months.
Ever since the news on Covid vaccine made headlines, the yellow metal’s appeal as a safe haven has diminished. With an increase in risk appetite, investors and institutions are opting for riskier assets like equity markets, hoping for a faster economic rebound.
Will gold rate will increase or decrease?
Gold and US dollar fell simultaneously, a rare phenomenon and a sign of asset rotation by investors. On one hand, lower physical demand from China and India hampered prices during the last six months due to lockdowns, and on the other hand, stimulus measures and a rising inflation supported prices.
With prices trading around $1,850 per troy ounce at Comex and Rs 49,000 per 10 gram in India, gold still looks like a decent medium to long term buying opportunity for investors who missed the rally earlier. The accommodative stance of central banks and the estimated time to be taken for the recovery of the globaleconomy keeps the future prospects of gold firm as a safe haven. It is also a good opportunity for investors seeking diversification through gold, considering their low prices when compared with August 2020 all-time highs.
Should I buy gold today or wait?
Will gold prices go up in 2021? We recommend a positional bullish view with a buy call around Rs 48,000 to Rs 48,500 per 10 gram, targeting Rs 52,500 in the coming six months.
Silver prices, on the other hand, has been quite volatile and has moved within a comparatively larger range from the peaks of Rs 78,000 in Aug 2020 to the lows of Rs 58,000 per kg during Nov2020. Weakening dollar, negative real yields and demand for silver from the solar power sector may keep prices firm, as the white metal also draws cues from gold, moving forward.
We suggest a buy on dips strategy at around Rs 60,000 per kg, targeting Rs 70,000 in the next six months.
Copper as an industrial commodity has outperformed recently and touched a 7.5 year-high recently, in spite of the Covid-19 impact globally. The demand from China was one of the major reasons, backed by reports of supply deficits for FY20-21, by almost 70,000 MT. With a decentdemand for refined copper from China, hopes over stimulus package announcements, vaccine news and a weakening US dollar, prices are expected to stay firm for a while.
We expect copper prices to touch the levels of Rs 620 per kg at MCX and may fall back to Rs 560 in the next four months, as most of the fundamentals are discounted at current prices of Rs 600 per kg.
Crude oil remained an underperformer and made headlines after the WTI crude oil closed sub zero levels in April 2020, with an immediate bounce back, once the storage concerns were addressed.
Currently, the prices are trading at around Rs 3,500 per barrel, as hopes over vaccine and stimulus packages by countries areboosting the expectation of demand recovery soon. However, the demand at the moment remains sluggish and with decent supply available from OPEC, the output is set to increase by half a million barrels per day soon, and for US oil production at 10.9 million barrels (MB) per day, which is just 2 MB per day lower than all-time high.
WTI is currently trading around $47.5 per barrel and may stay in the range of $40 to $50 for the next 2-3 months. The pace at which demand recovers will decide the trend beyond these levels. We recommend a sell at MCX Crude Oil contract at around Rs 3,600-3,700 levels, targeting Rs 3,200 per barrel in the coming months.