Gold price rises to Rs 51,600, silver rates at Rs 68,500

Gold, Silver prices in India on September 18: Gold prices gained after central banks globally pledged to keep interest rate near zero for a prolonged period and promised to roll out further stimulus if required.

The Bank of England kept its main interest rate unchanged at the record low of 0.1% on Thursday. Meanwhile, the Bank of Japan signalled readiness to ramp up the stimulus.

Federal Reserve a day earlier, vowed to keep interest rates near zero for a prolonged period until inflation is on track to overshoot the US central bank's 2% target. It, however, announced no additional stimulus plans to shore up a battered US economy. Gloomy jobs data out of the US also cast a shadow over the economic outlook, further strengthening demand for gold and silver.

On the Multi Commodity Exchange, Gold October Futures gained Rs 77 at Rs 51,530, after hitting an intraday high of Rs 51,644 against the previous close of Rs 51,453 per 10 gm.

Silver September Futures, gained Rs 132 to Rs 68,270 per kg today after they touched an intraday high of Rs 68,500 per kg.

Gold price fell to the lowest level in a week, in the previous session, after the FOMC quashed investor's hopes for more stimulus to support the ailing economy.

"Yesterday gold and silver prices were closed on a negative note. MCX Gold closed 0.72%% lower at 51453 levels and silver prices closed 0.93% lower at 68142 levels. In international market gold is trading at $1951 per ounce and silver is trading at $27.03 per ounce," said Anuj Gupta, DVP- Commodities and Currencies Research, from Angel Broking.

Gold price falls after 3 days; silver rates plunge to Rs 67,500

Overseas, gold and silver held steady today, aided by a weak dollar. Spot gold climbed 0.5% to $1,951.32 after falling to a one-week low yesterday. Comex gold was trading flat at $1,940 per ounce, while US gold futures were 0.5% higher at $1,959. Silver, on the other hand, eased 0.2% to $27.03 per ounce.

Commodity analysts said traders were optimistic on the bullion metal as near-zero interest rates globally dented hopes of fast economic recovery from the pandemic. Bleak global growth prospects and political and financial uncertainty has boosted the appeal for safe-haven assets. This has led to gold gain nearly 29% so far this year.

The dollar index, which gauges the greenback's strength against a basket of six currencies, steadied after falling overnight and traded 0.07% lower at 92.90.

On the equities front, Asian markets were mostly trading positive while US and European indices closed in the red territoty.

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Investors rushed to the safe-haven asset after the World Health Organization's (WHO) regional director for Europe on Thursday warned of a "very serious situation" unfolding in Europe. Weekly cases have now exceeded those reported when the pandemic first peaked in Europe in March, said WHO's Hans Klug.

Worldwide, there were 303.51 lakh confirmed cases and 9.50 lakh deaths from COVID-19 outbreak. Meanwhile, India's death toll from COVID-19 infections rose to 0.84 lakh and total coronavirus cases to 52.21 lakh as of Friday.

On the retail front, physical gold dealers continued to offer discounts in India as the precious metal's demand fell due to high prices. In India, 24-carat bullion per 10 gram in the national capital traded at Rs 54,650. Price of 24-carat gold stood at Rs 53,560 per 10 gram in Chennai. In Mumbai and Kolkata, the rate for 24-Carat gold stood at Rs 51,210 and 53,270, respectively.

Gold prices may fall below Rs 50,000 in coming days; should you buy or wait?

Technical outlook

Anuj Gupta, DVP- Commodities and Currencies Research, Angel Broking said, "Weakness is a dollar on the back of Federal Reserve pledged to keep interest rates low for a long time but stopped short of offering further on stimulus to shore up a battered U.S. economy and they also hold interest rates till 2023 with inflation never breaching 2% over the period. This is positive for gold and silver in longer-term as traders can park their money in safe-haven assets like Gold.

For gold trading, he added," As for today traders can go for buy-in gold at Rs 51,200 levels with the stop loss of Rs 50,700 levels for the target of 51,900 levels. They can also go for buy-in Silver at Rs 68,000 levels, with the stop loss of 67,000 levels and for the target of 69,800 levels. In the Bullion index, "Bulldex" traders can also go for buy at 16000 with the stop loss of 15850 and for the target of 16250. In the international market, gold may test $2000  per ounce and silver may test $ 28.50 per ounce soon.".

Cameron Alexander, Director of Precious Metals Research at GFMS, Refinitiv said,"The rally in gold has been powered by a safe-haven appeal for the metal due to the worsening economic conditions resulting from an out-of-control pandemic. The central banks around the world continue to inject stimulus to resuscitate domestic economies, which has led in some cases to currency devaluation especially dollar and lower interest rates, further supporting the rally. Another factor that could disrupt the financial markets and support the gold rally is the political developments in the U.S."

"Looking ahead, the focus will continue to be on the coronavirus developments worldwide and on fresh economic data coming out of the United States which will influence the price of gold in the short to medium term. Investors will be monitoring just how quickly the world's largest economy can return to expansion mode and how soon an economic relief bill will be finalised," he added.

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