Buy on Dips

 Gold price attempted to push through the key psychological resistance level of $1,900 an ounce this week but ended up settling just below that on Friday. Gold prices hollowed in on Friday as the decrepit dollar bounced back from 2-½ lows. But that didn’t stop the yellow metal from posting a third straight weekly rise from gains accumulated on bets that the U.S. Congress will soon pass another corona virus fiscal relief.

Gold futures settled with a loss on Friday, but tallied a gain of about 2.5% for the week following a decline in the U.S. dollar. Top gold dealers in India and across the world believed the following to be reasons that had an impact on the dollar:

There were three major events this week that had a profound impact on U.S. equities, gold, silver and the U.S. dollar.

1. Bipartisan deal- The first major event was a renewed optimism on the revision of a bipartisan proposal which was introduced last week. 
2. FOMC Meet- a key event that had a huge impact was the information from the Federal Reserve that was presented through this month’s FOMC statement and the following press conference by Chairman Powell immediately following the conclusion of the last FOMC meeting year. 
3. Vaccine- The third event that influenced the financial markets this week was the rollout of a Covid-19 vaccine that had just been granted emergency use authorization by the FDA.

After US Fed pretty dovish views we saw a collapse of the US Dollar and a big run up in gold and bit coin on Thursday. Though it hit most mentioned targets and even surpassed it to kiss $1901 an ounce.

Analysts from RiddiSiddhi Bullions Limited viewed that with the end of the pandemic was in sight, the U.S. dollar is behaving less like a safe-haven asset, and the currency is weakening, adjusting to its own fundamentals, suggesting strong support for gold.

Gold markets initially fell during the week, but then turned around to recover quite nicely to break above the top of the shooting star from the previous week. This suggests that perhaps gold is trying to turn things around and take off again. The $1900 level will offer a certain amount of psychological and structural resistance, but I do think that we break above there and eventually go challenge the $1950 level. That being said, it does not mean that we get there right away.

So it’s about the $900 billion Covid package from the US. Unless the USD index will now move beyond 90.5, gold will see bounce towards $1905-1915. On Friday the gold market was quite zig zag. Gold has rallied again during the week, breaking above the top of the shooting star from the previous one. It suggests that we still have plenty of momentum.

We would suggest buying gold on dips on levels $1878/1863/1858 and upper side it is expected to reach $1904/1930. So buying in dips would be the investment mantra.

Vaccine bubble may fizzle out soon

 Precious metals are heading for the first quarterly loss since 2018. Optimism surrounding vaccines and signs of recovery have dampened the demand for gold as a safe haven asset. Even as leading central banks continue to offer support for economies, the lustre on gold seemed to be little faded on Monday. This week, investors will keep a close watch on the Federal Reserve’s final meeting of the year, with markets widely expecting fresh guidance on its asset-purchase program.

It must be noted that gold prices have recorded year-to-date surge of 22%. This is despite the recent sharp fall in prices during the past month, when it had retreated almost 15%, compared with the highs recorded in the month of August.

Gold turned bearish in the second week of August, following a major bullish trend which lasted for a couple of years. This year, the bullish trend picked up further speed, due to the Coronavirus and the global economic recession, which turned traders towards safe havens.

But the bearish reversal came in August, and gold has been declining since them, pulling down silver as well, where we have an open sell forex signal

The gold prices witnessed phenomenal jump, mainly triggered by global economic concerns triggered by the rapid spread of Covid-19 pandemic. The optimism surrounding the vaccines against the virus has resulted in a rally in global stock indices, suggesting the chances of economic revival. However, it remains unsure as to when the vaccine could reach the entire population of the world. Also, its effectiveness continues to remain as a big question.

Gold prices fell 1% on Monday as hopefulness for a faster economic recovery got an incentive from the forthcoming release of COVID-19 vaccines in the United States, but hopes for further fiscal and monetary stimulus capped bullion's losses. Spot gold fell 0.9% to $1,822.90 per ounce during Monday’s trading session.

Gold was seen weakening over gradual global recovery, strengthening European equities, an extension of Brexit trade talks and with the vaccination of U.S. citizens with a COVID-19 vaccine. But, limiting gold's losses were reports of a $908 billion U.S. COVID-19 relief plan that could be introduced as early as Monday after a leading Democrat lawmaker suggested his party might be willing to reach a compromise.  

With the Fed’s intentions to ease policy by increasing the average maturity weighting of its Treasury purchases following the December FOMC meeting, gold enthusiasts may not need to wait much longer for a convincing move higher. 

Gold benefits from its appeal as a hedge against inflation that could result from the unprecedented stimulus unleashed in 2020. Analysts across the world, told gold dealers in India and investors now await the U.S Federal Reserve's two-day policy meeting starting on Tuesday.  

The vaccine bubble is going to fizzle out soon as things will take lot of time for complete implementations worldwide. There is a big IF among the vaccine takers, as its side effects rumours are gripping and that might place doubts in the mind of general masses. This could possible trigger gold. 

RiddiSiddhi Bullion Limited officials offered optimism and said that gold could rally in 2021 when the vaccine optimism dies down and investors’ focus returns to rising inflation expectations due to the large swathe of monetary and fiscal stimulus the U.S. economy still requires.