Gold Edges Higher on U.S. Stimulus Hopes

Daniel Fowler
September 28, 2020

India Gold October Futures fell on September 28 following a muted trend seen in the global spot prices. In India, gold futures on MCX closed 0.5 percent lower at Rs 49,659 per 10 grams. As gold prices fell, traders favored short (+4%) exposure rather over long (+3%) however, compared to a week ago, traders have trimmed some short (-5%) bets while adding some long (+7%) positions.

Spot gold fell 0.3% to $1,862.91 per ounce by 11 a.m. EDT, after touching its lowest since July a day earlier.

Present price action, shows the precious metal still struggling and underperforming but if the riskier assets like global equity markets keep up their bearish run relatively, the bears could be kept in check, and gold prices hover above $1,900 price levels.

Silver rose 0.3 per cent to $22.93 per ounce, platinum gained 0.4 per cent to $850.74 and palladium was up 0.1 per cent to $2,217.87.

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"Weak sentiments continue to take prices (London spot gold) lower towards the support of $1840 and likely is to trigger a rebound".

Concerns over rising coronavirus cases, especially in Europe, and uncertainty on additional stimulus from the USA government have especially dented hopes of global economic recovery among investors, causing the dollar to gain (also a safe haven asset) while reducing demand for the yellow metal.

"The Republicans and Democrats are on the same page about putting some stimulus but they are not being able to decide the amount and that uncertainty is pushing investors towards the dollar", said Edward Moya, senior market analyst at OANDA in NY. Near-term momentum remains bearish-biased, with the next support level likely found at US$ 21.80 - the 76.4% Fibonacci retracement. Gold may remain rangebound unless there are fresh triggers however general bias may be on the downside until the U.S. dollar comes off the highs.

Ravindra Rao, VP- Head Commodity Research at Kotak Securities. Gold remains under pressure by recent gains in USA dollar and mixed ETF flows which show weaker investor interest. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

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