Economy

Gold prices testing key resistance ahead of 2021

Gold prices testing key resistance ahead of 2021”

What comes next hinges on a handful of unpredictable dynamics, ranging from the strength of the global economic recovery to the health of the US dollar.

Most-actively traded gold futures for February delivery finished Wednesday's session at $1,893.40 a troy ounce, putting gold on pace to finish 2020 up more than 24% - its best year since 2010. That also outperforms the S&P 500, which is up about 15% this year.

Analysts say its dual role and greater volatility means it may fare better than gold as economic growth picks up, and that US President-elect Joe Biden's push towards clean energy is an incentive to greater use. Investors tend to buy the metal when nervous about holding riskier assets such as stocks or corporate bonds.

Earlier, jewellers had said the prices in the local market remained Rs3,000/tola lower, compared with the rates in the Dubai gold market.

Much will depend on the strength of the US recovery.

Some also point to a weakening USA dollar that could further support gold as a better store of wealth. For such investors, the issue price of gold bond will be ₹4,950 gram of gold. Gold added 0.2% to settle at $1,898.36 an ounce on Thursday.

More news: Bitcoin Jumps To Record $28,600 As 2020 Rally Reaches New Heights

"Gold's main drivers - weaker U.S. dollar and low real interest rates - are likely to provide support" even as vaccines are distributed around the world, Vasu Menon, executive director of investment strategy at Singapore-based Oversea-Chinese Banking Corp, said yesterday in an e-mail. Meanwhile, HSBC sees gold climbing higher on continued uncertainty.

In global markets, gold prices finished 25% higher for the year in 2020, logging its biggest annual gain in a decade amid unprecedented wave of stimulus by central banks and governments and the dollar's decline.

In the worldwide market, the precious metal saw a decrease in price amid decline in value of dollar. Many Wall Street forecasters predict that increased government spending and a shift toward riskier assets will drag on the USA currency, which touched multiyear lows in 2020.

While vaccine developments have held gold bulls back recently, the consensus weaker Dollar call for 2021 should help their cause if that scenario plays out.

The US dollar index fell by 0.1% today against a basket of major currencies, and hit the lowest level in two and a half years at 89.51 points. The price of silver was also increased to reach $26.50 an ounce.



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