Where Does Gold Go from Here?

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Where Does Gold Go from Here?
Credit: © Reuters.

By Aditya Raghunath

Investing.com -- Gold prices have fallen for the 5th day in a row and are now trading at Rs 44,284/10 grams, after falling below the psychological level of Rs 44,300.

Expectations of a faster economic recovery on the rollout of vaccines and rising Treasury yields have added a lot of pressure on gold prices that have fallen from Rs 56,000/10 grams in August 2020 to below Rs 44,300 today. If factory activity in China picks up, it will add more downward pressure on gold. As the global economy recovers, it becomes unprofitable to hold gold.

Internationally, gold prices that were trading at $1,730/ounce levels last week are now at $1,683.2./ounce Gold had traded as high as $1,753 in March. The fall has been rapid.

Brokerages are divided on the future of gold. Motilal Oswal Financial Services Ltd (NS: MOFS ) is optimistic on gold and believes that the yellow metal is a good hedge against market volatility while Kotak Securities feels that there could be a fall but not a sharp one as COVID-19 cases continue to surge across the world. Kotak says that unless there is a sharp correction in US bond yields or the dollar, gold will continue to remain under pressure.

Experts say support for gold is at $1,680-$1,700 levels and if it breaks, the next support level is at $1,650.


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