Gold prices give up Rs 52,000 per 10 gm; yellow metal plunges 7.5% from record high

It took 9 trading sessions for gold to climb from $1900 to $2000 while it took just 1 day to crash from $2000 to $1890

Gold prices fell in Indian markets on Thursday on the back of profit booking due to rise in US yields, recovery of US Dollar and development of COVID-19 vaccine by Russia. In the previous session, gold tumbled 3.4 per cent, which was the worst daily drop since 2013, below $1900 and then gained as much as 2 per cent thus giving a single day move of almost 6 per cent. On MCX, gold October futures were trading Rs 265 or 0.51 per cent down at 51,980 per 10 grams, while silver September futures fell Rs 219 or 0.33 per cent to rule at Rs 66,534 per kg. “Prices of gold and silver were very much overstretched so a correction was overdue but nobody expected such sharp correction in a relatively short period,” Bhavik Patel, Senior Technical Research Analyst at Tradebulls Securities, told Financial Express Online. Patel explained that it took 9 trading sessions for gold to climb from $1900 to $2000 while it took just 1 day to crash from $2000 to $1890. Similarly, silver which took 4 trading sessions to gain from $25 to $30, took just one trading session to crash from $29 to $23.50.

Last week, gold prices hit an all-time high of Rs 56,191 per 10 grams while silver futures touched a record high of Rs 77,949 per kg. With today’s fall, the yellow metal is off Rs 4,211 or 7.5 per cent per 10 grams, and silver Rs 11,415 or 14.6 per cent per kg from respective peaks. Fed officials commented that the US economic recovery will be slow until the coronavirus is under control, and Americans will have to manage life with the virus for at least the next several months, this has further dented the investor sentiment. “Market participants today will keep an eye on the US weekly jobless claims data,” said Navneet Damani, VP, Motilal Oswal. Damani further added that a broader trend on COMEX could be in the range of $1910- 1955 and on domestic front prices could hover in the range of Rs 51,700-52,600.

Last week, gold prices were 46 per cent up from March lows of Rs 38,500 per 10 grams, while silver prices rallied over 132 per cent to hit their respective record highs.

Gold prices on technical charts

On a technical basis, even yesterday’s exaggerated move did not cause any extended chart damage and the additional froth that had been built up had been taken out which is a good sign. “Open interest was showing extremes in sentiment and now that many of the long positions have been taken out, we could again see rally resuming after prices consolidate. Correction is expected to be short-lived as there were buyers willing to buy on dip,” Patel added further.

(The views and investment tips in this story are expressed by the respective experts of research and brokerage firm. Financial Express Online does not bear any responsibility for their advice. Please consult your investment advisor before investing.)