Bulls back in control of silver, gold prices struggle below Rs 48,000

Gold futures prices rose while silver also rebounded tracking the trend in the international market. However, gains in gold were limited and analysts expect sideways movement for now, Economictimes reported.

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

Gold futures on Multi Commodity Exchange (MCX) were up 0.31 per cent or Rs 150 at Rs 47,975 per 10 grams. Silver futures climbed 1.61 per cent or Rs 1,090 to Rs 72,046 per kg.

“Supporting gold price is hopes of additional US stimulus, disappointing Chinese economic data and loose monetary policy stance of major central banks. However, weighing on price is recent gains in the US dollar and progress on the vaccine front. Gold may continue to witness mixed trade unless there is clarity on the US dollar trend, however we expect price to trade with a positive bias on US stimulus expectations and loose monetary policy stance of central banks,” said Ravindra Rao, VP- Head Commodity Research at Kotak Securities.

In the spot market, gold in the national capital declined by Rs 480 to Rs 47,702 per 10 gram in-line with fall in global precious metal prices. Silver also tumbled Rs 3,097 to Rs 70,122 per kilogram.

Trading strategy

“Silver bulls are back into barack after CME increased margin. Gold prices are expected to trade in the current range with sideways to downtrend for the day. MCX Gold April futures support lies at Rs 47,600 and resistance at Rs 48,600 for the day,” said Tapan Patel, Senior Analyst (Commodities), HDFC Securities.

Global markets

Silver prices attempted a rebound on Wednesday after an over 8 per cent plunge in the previous session prompted some buying, although the social media-driven rally that started last week appears to have cooled off.

Spot silver rose 1.4 per cent to $26.98 an ounce by 0052 GMT. Prices hit $30.03 on Monday, its highest since February 2013.

CME Group on Monday raised margins on its COMEX 5000 Silver Futures by 17.9 per cent. Spot gold rose 0.1 per cent to $1,839.16 per ounce. U.S. gold futures added 0.4 per cent to $1,840.90.

Platinum gained 0.3 per cent at $1,097.52 and palladium shed 0.1 per cent to $2,240.49.

Gold Price Analysis: XAU/USD to retest Tuesday's low at $1830

Gold (XAU/USD) is attempting a minor bounce after falling over 1% to eleven-day lows at $1830 on Tuesday. However, the daily chart shows that a bear cross is in the making for the yellow metal, suggesting that the sellers could remain hopeful despite the latest bounce, FXStreet’s Dhwani Mehta briefs, said Fxstreet.

Key quotes

“Wednesday’s pullback in gold can be mainly attributed to the progress on a likely US fiscal stimulus deal. The Senate voted 50 to 49 in a straight party-line decision in order to push through a $1.9 trillion aid package proposed by President Joe Biden. However, the covid vaccine-driven optimism could cap the recovery attempts in gold.”

“A retest of Tuesday’s low at $1830 cannot be ruled, below which the January 13 low of $1803 would come into play. Further south, the November 30 high at $1790 could offer some support to the XAU bulls.”

“The buyers need to find acceptance above the critical $1854, where the 21 and 200-DMA look to coincide. The next upside target awaits at the 50-DMA of $1858. The path of least resistance, therefore, appears to the downside.”

Price of Gold Fundamental Daily Forecast – Silver Plunge, Firming Dollar Weighing on Prices

Silver dropped more than 2% on Tuesday, retreating from a near eight-year peak it hit the previous session, according to Fxempire.

Gold futures are trading lower early Tuesday as investors continue to look for a reason to buy the precious metal in the wake of a steep drop in silver futures, increasing demand for higher risk assets, and a stronger U.S. Dollar. Additionally, uncertainty over President Joe Biden’s stimulus package, coronavirus vaccine rollout improvements and improving prospects for the U.S. economy are also weighing on prices.

Silver Plunge Drags Gold Prices Lower

When we saw gold only relatively higher on Monday while silver was trading 8-10% higher, we kind of figured that a sell-off in silver would push gold prices lower, and that is what we are witnessing early Tuesday.

Silver dropped more than 2% on Tuesday, retreating from a near eight-year peak it hit the previous session, as a margin hike by the Chicago Mercantile Exchange prompted investors to lock in profits. For you old-timers out there, this is what the COMEX exchange did to the Hunt Brothers in 1980 when they owned about 2/3rds of the silver market.

Global Equity Markets Already Adding to Yesterday’s Gains

U.S. stock futures rose early Tuesday morning after the equity markets kicked off the week with a bounce-back session.

Futures contracts tied to the Dow climbed 163 points. Those for the S&P 500 and the NASDAQ-100 also traded in positive territory. The move in futures follows a broad-based gain for the market on Monday, which saw the Dow add nearly 230 points and all 11 sectors in the S&P 500 rise. The stock market was coming off its worst week since October.

Stocks in Asia-Pacific rose Tuesday following the overnight jump on Wall Street. European stocks opened higher Tuesday as global markets reflect positive investor sentiment that an economic recovery, following the pandemic, is not too far away.

Congressional Republicans Make Counteroffer to Biden

Investors will also be following stimulus negotiations in Washington, where Congressional Republicans made a counteroffer to President Joe Biden’s $1.9 trillion stimulus plan on Sunday.

Biden met with those lawmakers on Monday as Congressional Democrats moved forward passing a reconciliation bill without bipartisan support. White House press secretary Jen Psaki described the meeting as “substantive and productive.”

Daily Forecast

Keep an eye on the U.S. Dollar, especially since it is now hovering near a seven-week high. It is getting close to a breakout to the upside, which is being fueled by the hopes for a speedy U.S. recovery. Dollar bulls may be starting to increase bets amid views that the United States has an advantage in growing is economy and vaccinating its population against COVID-19.

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