Gold Price move testing Patience and Conviction

Gold prices have again corrected back to around 1700 dollars over the weekend after a short rally to around $1740 levels over last few weeks. This is roughly around the prices that Gold was close to 10 years back. Gold prices move will now be testing patience and conviction of traders and investors.

In India, prices of May Goldm Fut is seen around 44400 levels after a recent rally to 45600 levels.

This is because of higher US 10-year bond yields around 1.73% and dollar index hovering around 93 levels.

We all know that higher dollar is negative for gold prices.

Higher bond yields also take money and flows in them as gold and silver don’t give any dividends.

It was only few months back in Aug’20, when the entire world wanted a pie of Gold and the bull case scenario was presented even at a price of $2080 too.

That price had a lot of risk sentiment and risk premium priced in which has withered away because of vaccine roll out and higher growth expectations.

At the current juncture, when US administration has passed a $1.9 trillion package in 2021 and are in midst of a further $3 trillion infrastructure package, situation is ideal for a look at gold.

I would like to highlight that the amount of printing $ in US was quite stupendous in 2020 and the year saw 20% of the entire dollars in circulation being printed last year alone.

Hence, current levels can be looked at for investment in precious metals and the accumulation can start.