Transition to Biden administration, worldwide surge in Covid-19 cases may further lower gold prices
Gold prices saw a rise of Rs 45 to Rs 48,273 per 10 gram in Delhi bullion market on Wednesday following a recovery in the prices of the precious metal across global markets.
According to Reuters, a weaker dollar helped to counterbalance the shift to equities as investors hoped that Covid-19 vaccine efficacy results would spur economic recovery.
StoneX analyst Rhona O’Connell told Reuters that she expects gold prices to consolidate further. She said, “A vaccine is not a cure and the acceleration in rates of infection is a major worry, not just humanitarian but also economic. Negative interest rates will persist.”
Dollar index’s weakening could mean that investors with other currency could invest in cheaper gold shares. Independent analyst Robin Bhar said, “It’s clearly bargain hunting at present. Prices have fallen over $150 in the past two weeks and investors are grabbing this opportunity to take positions.”
Even though markets rallied and gold prices rose slightly as the Trump administration gave the nod for transition to president-elect Joe Biden’s team, Wall Street bank Goldman Sachs believes that prices will go up once data about inflation emerges.
Spot gold on Thursday rose by 0.3% to $1,810.06 per ounce while US gold future held steady at $1,805.50. Experts believe the uptick in prices could be due to recent reports on US jobs and employment, worldwide resurgence of Covid-19 cases and transition from Trump to Biden administration.
HDFC Securities senior analyst Tapan Patel told PTI, “Gold prices pared morning losses and traded up as investors weighed vaccine progress and stimulus hopes as Joe Biden started White House transition.”
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