As stimulus hopes to tackle the Covid 19 led fall-out gathered steam in the US, gold has been rising for some days and is currently above Rs. 50000 per 10 gm price level. This year amid headwinds, gold surged handsomely from levels of Rs. 40000- Rs. 40500 to new high of around Rs. 56200 per 10 gm., which marks an almost over 37-38 percent surge in the current year.
Nonetheless experts now see a meaningful correction of 8-10 percent going ahead for the following reasons:
1. Coronavirus vaccine administration has begun in some countries including the US and Europe and may arrive early next year in India. This will put pressure on the yellow-metal as economic recovery hopes might strengthen on positive impact.
2. Also, as equities are at record high and economies are showing recovery from the previous quarters, for the medium term investors may move away from gold as an investment avenue.
3. After record inflow in Gold ETFs to the extent of more than Rs. 2400 crore in the past three months ended September 30, global central banks are offloading their positions in the gold backed reasons to make up for the fiscal strain due to the pandemic. And this will also put a strain on gold prices.
In last four years, gold has gained over 100% from levels of Rs. 25000 to Rs. 56000 per 10gm. In accordance with Elliot Wave Analysis, gold is done with all 5 waves over the course of its journey from levels of Rs. 25000- 56000 and now there is seen a reasonable correction followed by consolidation.
“Gold has support around levels of 48500-49000- 23.6% of 25000-56000= 31000 levels. Till it holds that level, a rally up to 54000 cannot be ruled out. Below the levels of 48500-49000, supports are at around 46000 (33%) and 44300 (38.2%) of the up move”, suggests Nitin Shahi, Executive Director- Findoc Financial Services Group.
And after finding a bottom around Rs. 40000-Rs. 405000 levels, it may trade in range of Rs. 40000- 50000 over the next year.
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