Gold price continues its slide, silver tumbles as traders book profits

In the spot market, Gold in the national capital on Monday tumbled Rs 1,324 to Rs 47,520 per 10 gram on a day when the government announced cut in import duty on gold and silver, Economictimes reported.

Gold futures prices continued its slide after the duty cut while silver futures prices also saw profit booking after Reddit frenzy lost steam on Tuesday.

Silver prices rocketed as retail investors, egged on by messages on Reddit, pile into the market in an attempt to push up prices. The retail investment frenzy in silver has left dealers from the US to Singapore scrambling for bars and coins to meet demand.

Gold futures on MCX were down 0.56 per cent or Rs 272 at Rs 48,448 per 10 grams. Silver futures dropped 2.20 per cent or Rs 1,620 to Rs 72,046 per kg.

“Gold prices attracted less investor interest over Silver jitters over Reddit buying saga. The yellow metal remains muted on lack of fresh triggers as investors are hoping for another stimulus announcement from the Biden administration,” said Tapan Patel, Senior Analyst (Commodities), HDFC Securities.

In the spot market, Gold in the national capital on Monday tumbled Rs 1,324 to Rs 47,520 per 10 gram on a day when the government announced cut in import duty on gold and silver. Silver, in contrast, jumped Rs 3,461 to Rs 72,470 per kilogram.

Trading strategy

“Gold prices are expected to trade in the current range with sideways to downtrend for the day. COMEX gold has important resistance at $1,876 per ounce and support at $1,848 per ounce. MCX Gold April futures support lies at Rs 47,900 and resistance at Rs 48,700 for the day,” said Patel.

Global markets

Silver prices dropped nearly 2 per cent on Tuesday, as investors locked in profits after the precious metal touched a near eight -year peak in the previous session.

Spot silver slipped 1.5 per cent to $28.54 an ounce by 0257 GMT, after jumping 7.3 per cent to hit its highest since February 2013 at $30.03 on Monday, as retail investors piled into the market following calls on social media in an attempt to push prices up.

Spot gold was steady at $1,860.36 per ounce. US gold futures shed 0.1 per cent to $1,861.90. Platinum declined 1 per cent at $1,115.86, while palladium added 0.4 per cent to $2,254.98.

Gold Price Analysis: XAU/USD preparing for take-off from daily structure

Gold prices are elevated at the start of the week, trading almost 1% higher at $1,864.89 at the time of writing, having travelled from a low of $1,847.74 to a high of $1,871.89 on the day so far, said Fxstreet.

Gold prices are bid despite a firm US dollar, correlated ore so to slumping US yields on the day, (see below).

Instead, the price of silver in an eye-watering rally pertaining to the Reddit movement has seen the ratio to gold dump to the lowest levels since the summer of 2014.

Gold, therefore, could well be playing catch-up with silver and there is some way to go yet before resistance.

There is further analysis of the price of silver below that argues the case for a deeper correction from the highest prices since 2013 before even higher prices can be achieved.

Meanwhile, analysts at TD Securities argued that ''while an engineered short squeeze in silver is a more difficult task relative to last week's tumultuous squeeze in several highly shorted and illiquid stocks, and the motives are muddied by hedge fund and bank bullishness, the effort can certainly keep prices and volatility elevated in the near-term.''

With respect to gold price, the analysts at TDS note that ''the bulls are increasingly relying on slumping Treasury yields, rather than rising inflation expectations, to fuel lower real rates.''

US 10-year yields are indeed lower today, travelling from a high of 1.089% to a low of 1.060% and down some 0.48% at the time of writing.

Price of Gold Fundamental Daily Forecast – Supported by Silver Surge; Capped by Stronger US Dollar

Gold has been essentially rangebound for weeks as investors waited for developments around a U.S. stimulus package, according to Fxempire.

Gold futures are trading higher, but inside Friday’s range as investors piggy-back strong gains in the silver market. Gold’s gains are likely being limited by a new one-week high in the U.S. Dollar. A rising dollar tends to limit foreign demand for the dollar-denominated gold.

Gold has been essentially rangebound for weeks as investors waited for developments around a U.S. stimulus package, although the precious metal did post a weekly and monthly decline hurt by a stronger U.S. Dollar.

Gold Traders Watching Stimulus Developments in Washington

A group of 10 Republican senators sent President Joe Biden a letter on Sunday, urging him to consider a smaller, scaled-down COVID-19 relief proposal. His current proposal comes after House Speaker Nancy Pelosi said the chamber will move to pass a budget resolution, the first step toward approving legislation through reconciliation. The process would enable Senate Democrats to approve an aid measure without GOP votes.

Daily Forecast

The fundamentals are not especially bullish for gold with the U.S. Dollar showing strength and Democrats and Republicans still far apart on approving more stimulus, but that doesn’t mean the momentum driving the silver market can’t spillover into gold. Traders should be prepared for heightened volatility and the possibility of a whipsaw trade, similar to the price action on Friday.

The current set-up on the daily chart suggests $1878.90 is a potential breakout area with $1894.10 to $1911.20 a reasonable upside target. Speculative buyers could try to run buy stops over $1878.90.

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