Trump signs the stimulus bill

 Gold prices were thrown about last week as the dollar rebounded sharply from 2-½ year lows after the British pound crumbled on fresh Brexit woes.

Gold tumbled early in the week on the dollar's strength before recovering in recent days on the stimulus drama. The rebound fell short, however, of its Friday settlement of $1,888.90, resulting in the weekly loss reported RSBL team.

Gold prices jumped as much as 1% on Wednesday, bolstered by a weaker dollar, while investors kept hopes pinned on a U.S. stimulus package even after President Donald Trump threatened to not sign the relief bill.

Gold prices rose on Thursday but still finished with a weekly loss, after the twist to a U.S. coronavirus stimulus package and the dollar’s unexpected gains in recent days prevented the yellow metal from extending a three-week rally.

President Donald Trump threatened to not sign an $892 billion coronavirus relief bill, seen as a lifeline for the nation’s pandemic-battered economy saying the amount in the stimulus checks should be increased.

Gold has also been tugged around since Sunday’s deal by U.S. Congress on a $900 coronavirus stimulus and $1.4 trillion in federal government funding. Both those packages are now at a midpoint after President Donald Trump’s refusal to sign them, particularly due to his objection over a measly $600 in personal Covid-19 aid for needy Americans approved by his own Republican party.

But that didn’t affect gold much because Even if Donald Trump declines to sign the bill, it is widely expected that Biden will make it pass.

But against all expectations, the Trump signed the stimulus bill on Monday. Amidst these speculations and developments over weekend Brexit deal, uncertainty over these issues will finally be clear. 

Trump on Sunday signed into law a $2.3 trillion pandemic aid and spending package, restoring unemployment benefits to millions of Americans and averting a partial federal government

The gold (0.27%) price moved higher in early EU trade on Monday. One of the reasons for the move higher in gold came as outgoing US President Donald Trump signed the COVID 19 relief deal.

Volatility continues for gold and silver this week amid a rollercoaster on the U.S. stimulus, new virus strain, and volatility in the dollar index.

Gold markets have gone back and forth during the course of the week, showing signs of exhaustion. Ultimately, top gold dealers across India think that if we get a pullback, we could see an opportunity to pick up gold “on the cheap.”

Over the long term, markets look volatile with a lot of instability on geopolitical grounds. Markets continue to remain in panic mode over the new strain. Moreover massive amount of liquidity has been forced into the market. 

As the uncertainty continues, it’s expected for investors to move to gold in order to protect their wealth. Given this, gold is expected to wave goodbye to 2020 on a positive note.

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.

Stimulus for economy boosts gold prices too RSBL

 After a weak November, gold once again strengthened this month over varied reasons. Gold recovered more than 5% since slumping to a five-month low on Nov. 30, with November also marking bullion's worst month in four years, pressured by hopes of a vaccine-fuelled economic recovery.  

Gold is revering from one of its most fierce sell-offs ever, after new breakthroughs in COVID-19 vaccines and their possible availability before the year end caused a run on money in safe-havens.

 November was the worst month for gold in this year. The yellow metal lost about 6% of its value in November, its most for a month since 2016 and fell into $1,700 territory. Investors have in recent weeks directed money mostly into stock markets and other risk assets such as oil, as those witnessed an epic rally amid the notion that vaccines and therapeutics would soon bring an end to the spread of the corona virus.

But December came in as a surprise for gold. Gold gained more than 1% to a two-week high on Monday, augmented by prospect of fresh fiscal stimulus in the United States. Despite the continued emphasis on risk, gold as a haven is rallying again on talk of a new U.S. Covid-19 stimulus efforts. Monday’s rally in gold was reignited by Congress’ aim to scrape together a corona virus relief package before the end of this week and prevent a lapse of benefits that could send millions of Americans spiralling further into financial peril at the end of the year.

Gold prices resumed their run higher, picking up from last week’s three-day rally, on signs that U.S. lawmakers were closing in on a fiscal deal to keep the government open and continue with pay check protection for millions of Americans stressed by the Covid-19. U.S. lawmakers sought to hammer out an agreement on infusing long-awaited relief through a $908 billion Covid relief package soon. 

Analysts and top gold dealers all around the world agreed that lawmakers aim to pass both pandemic aid and spending legislation before the government shuts down on Saturday. They will have to quickly resolve several sticking points to meet the deadline.

Democrats, who control the House of Representatives, have backed the plan as the basis for an emergency relief bill as a sustained Covid-19 infection surge stresses hospitals across the country. Republicans, who have a majority in the Senate, have indicated they will support the measure without specifying how much exactly in dollars and cents. Fresh restrictions might also we witnessed. 

The stimulus plan has helped stabilize the gold market because more money being pumped into the financial system is inflationary.

Gold prices typically rally in any stimulus or monetary expansion exercise.

Any kind of stimulus measure will result in rising inflation. And time and again gold has always been considered as a hedge against inflation. Any such situation will result in a rise in gold prices which has already gained 22% so far this year.

Apart from the stimulus package, important data was also released and many important numbers are yet to come this week. The US payrolls data had mixed statistics. While employment rates improved, there was dip in overall monthly payrolls compared to expectations. Now the falling USD at 90.7 is supporting precious metals. As mentioned last week by industry and RSBL spokesperson that gold at $1850-185, a crucial barrier and even in Friday it attempted $1852 and gave up later.  Gold made a good bounce back on Monday, hitting the precise $1865 and MCX above 50,000 in rupee terms. Gold looks positive and traders are still looking for dips to buy.

Furthermore, the US- Sino tiff continued as the United States imposed sanctions and a travel ban on 14 Chinese officials over their alleged role in Beijing's disqualification of elected opposition legislators in Hong Kong. Meanwhile, Britain was set to become the first country to roll out the Pfizer/BioNTech COVID-19 vaccine this week.

Historically, a rise in uncertainty and fear is the single biggest factor that leads to a spike in prices of gold as central banks increase the pace of gold purchase. If uncertainty around the pandemic propelled prices beyond Rs 57,000 per 10 grams in August (from around Rs 40,000 in January 2020), it should be remembered that it is not yet over, and is certainly not the last risk the world will see. Gold prices get impacted by several factors including geopolitical tensions, interest rate movements and change in value of the dollar with respect to other currencies.

Gold will be back soon

 The past week or for that matter, the month of November wasn’t that great for gold. . The price of the yellow metal plunged then from $1,840 to $1,780 last week. Actually, gold prices dropped from a local peak of $1,941.

On Friday, gold broke below the key $1,800 support level to reach 5-month lows. Gold prices plunged over economic recovery, hopes of quick vaccine availability and a smooth White House transition. These same reasons were responsible for pushing the share markets to new record highs.

Well let’s have a look over the reasons for this downside in gold- 

Covid-19 Vaccine- Well, it seems that the positive news of the vaccines eliminated the negative tail-risk related to the pandemic. In consequence, the safe-haven demand for gold declined.

Bit coins- On the other hand, the price of Bitcoin jumped recently as investors increased their risk appetites and diverted their attention from gold. 

US Election results- The elections results also reduced the uncertainty in the marketplace. In other words, the economic outlook is improving as the uncertainty clouds begin to part.

Smooth transition - President-elect Joe Biden announced the beginning of a formal transition of power from Trump’s administration to his. Biden also started to announce nominations for top positions, which served to reduce the risk that a contested election had for uncertainty among investors.

Fed Chief- there are rumours that Biden is likely to tap former Fed Chief Janet Yellen to become the next Treasury secretary. Investors know her and trust her, so they welcomed the possibility of her nomination for a key position in the new administration).

Fiscal Package prospects- Yellen, who is seen as a possible candidate for the Fed Chief post, is expected to be a great supporter of bigger government economic aid. Actually, she has for some time been calling for increased government spending to help combat the recession and has always been concerned about the labor markets, low participation rates and high unemployment. As well, as the former Fed Chief, Yellen will closely cooperate with the US central bank and will listen to the Fed’s calls for a fiscal package. She will, therefore, help sustain high government expenditure to assure that the labor market is recovering. Any for, of possible recovery has led to a downfall in gold prices. 

Top gold dealers in India believe now what we really need to focus on is the year end. There are many factors that will play a key role as 2020 comes to an end.  Gold may be bullish right now, but we have many other reasons that cannot be ignored and which can turn the table for gold. 

In the next few weeks leading up to the Christmas holidays, the market's attention will shift to how severe the COVID-19 restrictions will be, whether there will be any more stimuli this year, and what more can the Federal Reserve do to help, according to analysts. RSBL analysts confirmed that the market sentiment will be more likely influenced by news on the timing of a vaccine and concerns about a near-term intensification of Covid containment measures in the wake of Thanksgiving gatherings.

Any rise in cases will lead to a pressure on medical emergency services and will lead to further restrictions. Jobs markets have suffered due to curfew and these restrictions have been imposed in many parts of US. Further, new restrictions could harm the economic recovery, which is already struggling to recover. 

Furthermore, if we get some type of big move against the US dollar, that could have gold turning around as well. Central banks around the world will continue to throw liquidity at the markets ad this will definitely bring gold back into the market. 

The next phase of this bull cycle will rely on a lower U.S. dollar and this is really the main, key factor that will allow the price of gold to move much higher.

Gold continues to remain stronger

2020 has been an exceptional year. From uncertainties to travel restrictions to local lockdown and closure of sectors, we have seen it all. Markets have fell significantly, precious metals have rallied meaningfully. Till date the financial crisis which began in 2007-08 was considered as once in a life time event. But Covid-19 has made all these events look small. 

In the past, central banks have turned to gold – universally known as the safe-haven asset. The precious metal has helped central banks tame the impact of negative sovereign bond yields and has acted as a source of value against deflation. It has also helped central banks reduce currency concentration within their portfolios. During the Covid 19 pandemic, central banks have aggressively cut interest rates and dramatically expanded their asset purchase programmes. This has supported expansionary fiscal policies and pushed precious metals higher.

We all have seen that; gold has outperformed other assets in all macroeconomic regimes. Investors have shifted to gold amidst this turmoil. The safe haven asset has been every man’s favourite in this crisis.

In spite of these uncertain times, gold has been one of the few asset classes that has generated positive returns. And we expect this to continue further said the spokesperson from RiddiSiddhi Bullions Limited. Central banks have been consciously purchasing gold and increasing their reserves. They are using it as a hedge tool against inflation. Central banks have long been purchasing gold to reduce their dependency on other currencies within their portfolios, precisely the US dollar.

Allocation of funds in their portfolios grew larger which in turn declined US dollar foreign reserve currency allocations. The sharp fall in dollar liquidity at the height of the pandemic in March and April saw investors and official institutions focus their efforts on securing access to the world’s reserve currency. 

For countries facing US financial sanctions, gold remains an attractive alternative. Hence major countries like China, Russia, Turkey etc were all focussed to increase their gold reserve and reduce their dependency on the US dollar. 

Moreover, the extraordinary economic shock created by Covid 19 creates an indeterminate stance that also affects gold. Midway through the year, there were signs normality was returning: travel restrictions were eased at home and abroad, people were encouraged to return to work, and positive case numbers across Asia and Europe fell. But this led to a second wave of infections which is expected to be even more harmful. 

Nonetheless, the sustainability of recent price increases remains uncertain. But one thing is certain- the bright future for gold. Factors responsible for this bullish trend-

• The Fed’s  policy framework
• New domestic lockdown measures are being imposed across Europe
• The US is unlikely to reopen its borders this year
• Continued market instability
• Growing uncertainty about the future shape of the global economy
• Sharp GDP falls,
• Negative bond yields
• Growing tensions between the US and China
• A protracted global health crisis

One of the top gold dealers in India, RSBL confirmed that amidst all this uncertainty, only one thing seems certain: gold will continue to be an investor’s umbrella.

Gold manages to regain strength

Just when the markets were about to enter some stability mode, post U.S elections, breaking news swept the market with immense volatility. Gold prices gained significantly before U.S Elections and dropped also at the same speed after the results were out. But surprisingly it wasn’t Biden’s victory that led to this downfall. 

Gold prices dropped nearly $100 on Monday morning after Pfizer and BioNTech announced a potential vaccine for the COVID-19 virus.

The price of gold came tumbling down after an optimistic report filed Pfizer and BioNTech with respect to the efficiency of the COVID-19 vaccines mounting to 90%. The positive news of a possible vaccine that could contain the virus and combat the global pandemic raised hopes which resulted in gold seeing a sharp decline in its price.

Gold prices tumbled over 5 % on Monday, as a corona virus vaccine developed by Pfizer and BioNTech showed a 90% success rate in an interim analysis of its phase 3 clinical trials. Optimism faded quickly however, as traders reassessed the near-term implications, with the global economy facing an imminent threat of another pandemic wave and virus-related lockdown measures. Even if the vaccine is proven successful, it may still take months before it passes all the regulatory requirements and becomes publicly available. Manufacturing capacity, storage and transportation are future challenges too.

Moreover, analysts all over the world as well as at RSBL are warning that the selling pressure appears to be overdone as there is plenty of uncertainty and liquidity in the marketplace to support the precious metal.

And as we all know, the vaccine is not accessible to all right now. It is in its launch mode and hence exiting the market would not be advisable. In fact, when everyone can get a vaccine that is maybe when you want to sell gold, the bullion king of India, Prithviraj Kothari commented.

Moreover, even though the vaccine will be helpful in curbing the virus, but the damage that the virus has caused cannot be undone. World over, economies have suffered and it will take a good amount of time for them to recover.

There is still plenty of uncertainty to support gold’s new regime In addition, Trump refuses to concede defeat to Biden, mounting legal action against vote counting in states where he lost, adding an element of uncertainty to the political situation in the US. On Monday, Trump’s campaign filed a lawsuit to block government officials from confirming Biden’s victory in Pennsylvania.

After the initial optimism surrounding a possible vaccine receded, traders turned their focus towards a likely stimulus package being announced soon in the US. Biden’s recent victory in the presidential election has raised hopes for a larger corona virus relief package, which has boosted gold prices in turn.

The expansions of central banks’ balance sheets, alongside an ultra-low interest rate environment, have propelled a big rally in precious metal prices this year. This is because gold is commonly viewed as a good hedge against fiat money and a store of value. In the medium- to long-term, however, a slower pace of monetary easing and potential tapering may put gold at risk for a pullback.

• In the near term, many factors will be helpful to cushion the downside for gold prices-

• The need for a fiscal stimulus continues in the US

• Second wave of infections continue to hover the EU 

• The path to recovery for the EU seems to be fragile 

• The monetary environment is likely to remain accommodative in the foreseeable future to prevent systemic risk

All said and done, Uncertainties surrounding the post-election transition, pandemic, and a tepid economic outlook may also lift appetite for gold.

U.S. Presidential Elections and Gold

 The effect of the U.S presidential elections on the prices of gold and the global markets on a whole has been a topic of passionate debate since quite some time now. It is witnessed that the value of the U.S dollar correlates with the price of gold.  Which means that they are inversely proportional- a higher dollar reflects drop in gold prices and vice-versa.

With just a few days to go before the Nov. 3 U.S. General Election, most political pundits have noted that Democratic nominee Joe Biden has a solid lead in national and key state polls. Meanwhile, according to political analysts, it looks like Democrats could flip seven sets and give them a majority.

With the U.S. election just one week away, volatility is rocking the financial markets, except for the gold sector, in which investors remain very cautious ahead of the big event.

Some believe that president Trump will emerge victorious, thus strengthening the dollar and a Biden win will weaken it. 

But as we all know, markets are completely unpredictable and we definitely don’t know how they will react over the election results. 

But still, we can analyse and see what effect each victory will have on gold. 

According to bullion king of India, Prithviraj Kothari, there are four main scenarios investors are preparing for come Election Day —

a) DEMOCRATIC WIN- The most volatile scenario for gold would be a blue wave at the polls with the Democratic candidate Joe Biden winning the presidency and the Democrats getting control of the Senate.

Biden’s regulatory changes are expected to include a $1.7 trillion climate policy and a $1.3 trillion infrastructure improvement plan. These would be great for improving the future of the country, but would drastically increase the national debt at a time when it’s already high. He is also expected to bring in corporate and capital gain hikes and industry regulations. This would put further strain on the value of dollar resulting in higher gold prices and weaker equities.

In a simplistic overview, a blue wave scenario, which is not yet fully priced in, is likely to trigger a lower U.S. dollar and higher gold prices.

b) TRUMP’S VICTORY – Most analysts across the world are of the opinion that if Trump is re-elected to the seat  of power, gold prices would not be affected and would not rally to a high that the market had seen during the pandemic. However, investors as well as analysts are cautious about the outcome of the Senate as a lot will depend on it as well as the economic recovery. The current uncertainty in the global state of political as well as social affairs is helping the price of the gold. Now everything really depends on what the economy is doing at that time and what it needs. If the amount of stimulus the economy gets is on the low side, gold will probably rally, but in a consolidated range.

c) SPLIT CONGRESS- Split Congress scenario means that the fiscal impulse becomes less prevalent, which puts more emphasis on the Fed trying to generate inflation through their mechanisms. This result will bring the Fed more in. gold market will then be looking at what the Fed can do to lower rates. A spilt congress may keep the markets steadier, as the changes will be less impactful and uncertainty reduces. Biden's reign is expected to be calmer, without the unpredictable and random acts of control Mr. Trump is known for. Biden would be more likely to calm trade relations with China and lift various sanctions on foreign countries. This would be great news for the stock market but will reduce the demand for gold as investors will start parking funds into equities.

d) CONTESTED ELECTIONS- Depends on what contested election actually means and how long it will go on for. The reaction in markets comes from how it all impacts the economy. Gold will work as a hedge against that.

It is in the near term that we are likely to see increased volatility, choppy trading and fluctuations in the stock markets and the gold price, particularly in the run-up to US Presidential elections.

The US Presidential election has a historical tendency to influence financial markets as a change in leadership often brings a shift in fiscal policy.

With the Federal Reserve expecting to keep interest rates at the zero-bound range through 2020 and potentially significant government stimulus flooding the markets next year, there is potential for inflation to rise 2.5% or even 3%, which would mean significantly lower real interest rates.

Nevertheless, one observation to apply to the unique situation of present conditions is that gold prices have become more volatile in the 21st century, and it remains to be seen if the trend will hold for the 2020 election as the economic shock from the COVID-19 pandemic clouds the macroeconomic outlook.

Looking out to 2021, investors see gold prices ending the year around $2,400 an ounce.

Gold continues to attract investors

 Gold has always been considered a hedge against inflation, currency debasement and uncertainty. The yellow metal has gained 25% this year, driven by massive global stimulus to cushion economies from the pandemic-induced slump.

In spite of new stimulus measures, the U.S. and global economies are not expected to significantly recover until there is a vaccine for the coronavirus, which some health officials say won't be widely available until the summer next year.

In general, gold still looks positive and strong as it has a long way to go. While COVID-19 cases in the US are levelling off, the disease is still a major concern in countries such as India and Brazil, European cases are rising again, and health officials are worried about combating COVID-19 in flu season. Further, equity valuations seem historically elevated, US-China relations are worsening, and the potentially contentious US presidential election is looming. But growth has rebounded strongly. And with the improved prospects of vaccine approval, top gold leaders in India and analysts at RiddiSiddhi Bullions Limited remain overweight global equities over fixed income.

This environment of meagre growth will keep inflation pressure muted, which means real interest rates might not go much lower than current levels, concerns that a steep rise in COVID-19 cases could lead to renewed lockdown measures and hinder the global economic recovery might extend some support to the USD's status as the global reserve currency.

Gold prices edged up on Thursday after U.S. President Donald Trump reignited hopes of a coronavirus stimulus package before the Nov. 3 elections, but a strong dollar kept the metal's gains in check.

Spot gold rose 0.3% at $1,906.15 per ounce during the trading session. Trump said he would agree to go higher than the $1.8 trillion that the White House has offered in coronavirus stimulus to strike a deal.

Furthermore, even with the government expected to pass a new aid package before the end of the year, the U.S. economy will see only marginal growth until at least the summer of 2021, until the COVID-19 pandemic is under control.

However, once the global economy starts to pick up that is when investors should start to pay attention to inflation fears and that will be an important factor for gold.

Regardless of volatility, some experts recommend holding a gold allocation of 1% – 5% of an overall investment portfolio, and such a position may make even more sense against the current economic and political backdrop. Given the flexibility of the investment, you can hold the precious metal in a myriad of ways that can pay off in the long run. From buying gold-related stocks to the yellow metal itself, even a small position can have a big effect on overall performance amidst an unpredictable market.

Gold remains as volatile as ever. Even (or perhaps especially) in the face of an uncertain future, a little gold in your pocket—and your portfolio—can go a long way.

Gold is going to be driven by the tone of the U.S. dollar. The big move is going to probably occur after the presidential debate when we have a better read on where the polls are going to be sitting.

Another significant aspect that can play a key role in influencing gold prices- with so many UK property companies putting a freeze on withdrawals by investors, liquidity risk is now rising – and not just in the UK.

Gold’s traditional role as a safe-haven asset means it comes into its own during times of high risk. In these instances, when liquidity may fall for other investments, gold can act as a genuine diversifier over the long term

The following will play a key role in producing some meaningful trading opportunities fir the yellow metal.

The US macro data

broader market risk sentiment

US stimulus headlines,

Ultimately the macro factors that have driven investors to seek the yellow metal's warm embrace will keep investment capital flowing into gold well into next year.

Markets remain perplexed

Gold has risen about 25% this year, supported by massive stimulus by governments and central banks worldwide as the metal is seen as a hedge against inflation and currency debasement. On and off we have been receiving news that are acting as pull and push factors for gold.

Following suit, last week, markets went in to perplex mode after U.S. President Donald Trump tested positive for corona virus. In spite of the global uncertainties surrounding this news, markets continued it remain bullish for gold as there are many key data releases and events lined up for the week. 

A lot of speculation has been surrounding gold lately. Economic data, stimulus package, presidential debate, China data and now the Trump news- it all seems like a rollercoaster for gold. 

Gold dropped to levels below $1900 an ounce and then managed to pull back and was seen trading around $1900 an ounce on Friday.

The bullion kingof India remarked that it was obvious that Trump’s corona virus news will create panic in the market, leading to uncertainties and pushing gold higher. But there was positive news over the weekend, that Trump has been recovering positively and hence we were expecting gold to stabilise.

Gold inched up on Monday as the dollar weakened, although gains were limited as news that U.S. President Donald Trump, receiving treatment for COVID-19, could be released from hospital boosted risk sentiment. Spot gold was up 0.1% at $1,900.46 per ounce by 0954 GMT. U.S. gold futures were down 0.2% at $1,904.50.

Top gold analysts and top gold dealers in India are of the opinion that gold alone will not be the only one to be influenced. Any news in those lines will also have a direct effect on stocks too.

Gold and stocks are trading together. There is going to be a lot of uncertainty, and there is a risk that investors will choose to liquidate their positions just to protect themselves in case some negative news is releases in the days to come.

It seems that current scenario looks best for speculation. Trump has symptoms but he is recovering positively. News released by the doctors treating him, will surely be a market stabiliser.

With Trump in quarantine for the next two weeks, all eyes will be

• The vice-presidential debate on October 7 between Vice President Mike Pence and Joe Biden's running mate Kamala Harris, according to analysts.
• Federal Reserve's September meeting minutes, this will also be released on Wednesday.
• Any news regarding interest rate hike prospects progress on stimulus package
• In terms of data, there is the U.S. ISM non-manufacturing PMI on Monday and jobless claims on Thursday.

We have always seen that first two weeks of October are always good for gold. Firstly there I sell off post Labour data and in the domestic markets too, gold’s demand rises during the festive season. Gold generally rallies during this time.

And even if there is a fall in prices, investors still consider this dip as a buying opportunity for gold. Both ways, it will be a win-win situation for gold.

Investors believe that gold has the potential to climb back to $1980 over the uncertainties prevailing in the market.

Sentiments are strongly bullish for Gold

Time and again, gold has enjoyed a safe haven status, and in the current pandemic scenario, investors are always on the verge of safe places to park their funds. Hence sentiments for the yellow metal have grown bullish, supported by demand and hence some analysts believe that currently gold has been overbought.

Furthermore, weakness in the dollar and low U.S Treasury yields are expected to provide further support to gold. The price of gold has extended its correction from the record highs above $2 070, registered in the first week of August. Despite this, there is no reason to panic and as long the price of gold is above $1 800 this precious metal is in the “buy” zone confirmed the spokesperson from RSBL.

The price of gold may be ready to advance higher as Federal Reserve announced that will keep interest rates lower for longer to support the economic recovery

U.S Fed kept the interest rates unchanged, as expected. The latest FOMC statement and economic projections signal are that the interest rates will stay at zero until the end of 2023. This is excellent for gold. 

On Wednesday, the Federal Reserve issued a statement regarding the FOMC meeting, which was held from September 15-16. The US central bank kept the interest rates and the conditions of its quantitative easing unchanged

U.S. weekly jobless claims report on Thursday showed a smaller-than expected decline in new claims, weighing on the dollar and bolstering the appeal of gold as an investment alternative.

The unemployment rate is forecasted to be around 7.6 percent in 2020, compared to the 9.3 percent seen in June. The fact that the recovery has progressed quicker than expected is bad news for the gold prices. But still, the overall economic activity remains well below the pre-pandemic level.

U.S. data also showed that more Americans submitted unemployment claims than forecast, with 860,000 initial jobless claims against the estimated 850,000. The data also showed that almost 30 million Americans were claiming unemployment benefits as of the end of August.

When it comes to the PCE inflation, the FOMC now sees higher inflation in 2020 (1.2 percent) than June when they expected only 0.8 percent. However, the FOMC projects that the inflation rates will be below their target until 2023, which is an excellent excuse for continuing their dovish monetary policy, thus supporting gold prices while the dollar declines.

Last week's trading saw gold forming its high in Wednesday's session, here doing so with the tag of the 1983.80 figure. From there, a decent decline was seen into Thursday, with the metal dropping down to a bottom of 1938.20 - before bouncing off the same into the weekly close.

Gold prices gained on Friday buoyed by a weaker dollar and lingering concerns over an economic recovery from the damage inflicted by the coronavirus pandemic that were underscored by elevated weekly U.S. jobless claims data.

Spot gold climbed 0.6% to $1,953.80 per ounce during Fridays trading hours and was on track for a second straight week of gains, rising 0.7% during the day.

RiddiSiddhi Bullions Limited confirmed that sentiments are strongly bullish for gold as markets expected prices to rise higher and even hover in that zone for a long time.

An environment of negative real interest rates, uncertainty over the global economic future and global uncertainties, such as the upcoming U.S. presidential election, are among the reasons that have pushed investors to build up their gold holdings.

Meanwhile, in the domestic markets, market participants await prices to stabilise as the festive season begins.  Hopes prevail in the markets that demand might rise, over price stability. 

All eyes on Fed Meet

Time and again, gold has been considered as a safe haven asset. In recent times, gold did deviate from this notion in March, as its prices fell following a crash in global stock markets.

This deviation underlines the uncertainty that gripped investors that month, with some gold owners presumably selling bullion to cover losses or to increase cash holdings.

But the past 3-4 months, have brought a significant  rally in gold prices. Though gold witnessed a few dips, but it managed to bounce back.

Last Friday, gold closed at $1,938 per ounce, up $14 for the week on excellent volume, considering it was a holiday week. During the trading week, gold showed excellent stability, closing the four days trading within a $20 range from high to low.

After reaching an all-time high of $2,070 on August 7th and seeing a selloff (profit taking) on August 12th, taking the price down to $1,870, we are now seeing base building. 

Last week gold had weakened over news of renewed vaccine. This hope triggered a strong DOW Fut at +285 and whole Asian markets mood lifted owing to that. The Oxford and Astrazencia vaccine trial resumed, but the number of patients across U.S, India, France and Brazil continued to rise. Some worrisome news came from France where initial talks of 1 week shut-down were under consideration. Moreover, Israel will also be doing it shortly. So, these are new dangers for the global post-Covid growth that is being factored by the markets. 

Gold rose to its highest in nearly two weeks on Tuesday, propelled by a softer dollar and expectation that the US Federal Reserve will reinforce its accommodative monetary policy.

Spot gold rose 0.6% to $1,968.94 per ounce on Tuesday, having earlier climbed to $1,971.71, its highest since Sept. 2. 

Once again gold was riding high over bullish sentiments. In the past five sessions, gold had four positive closes and it continued to rally on Tuesday morning. 

Gold (XAU/USD) built on Monday’s 1% rally after a steady start on Tuesday, reaching fresh nine-day highs at $1967. 

The main highlight in the past few days were-

• an improvement in the risk-sentiment

• courtesy of the vaccine hopes

• upbeat Chinese data 

• renewed US-Sino trade optimism

A good sign in the ongoing global crisis were the Chinese activity numbers that came in stronger than the estimates, suggesting the economic recovery is gathering steam. China’s industrial production in August was up 5.6%, year-on-year, and up 1.0% from July. Meantime, U.S. industrial production rose 0.4% in August from July, failing to meet expectations for a 1.0% rise in the period. However, July industrial production was revised up 0.5%, to a 3.5% rise from June. Also, news that China extended tariffs exemptions on some of the US good imports further fuelled the market optimism.

But markets were more focussed on the events lined up this week.

Gold futures on Tuesday headed higher and aimed for a second straight gain as investors awaited dovish statements from global central banks that are likely to support bullion buying in the midst of the global coronavirus pandemic.

There are going to be important policy decisions from major institutions- The Federal Reserve, Bank of England followed by Bank of Japan.

Bullion dealers across India and around the world as well as investors are expecting policy makers to promote a regime of low interest rates for a prolonged period to combat COVID-19, which could lift both gold and stocks further, commodity analysts forecast.

Given the current situation, central banks are expected to convey a dovish message to the markets which would further result on higher gold prices.

Prithviraj Kothari of RSBL suggests that market participants now await the U.S. Fed’s two-day policy event which ends on Wednesday, its first such meeting since Chairman Jerome Powell unveiled a policy shift towards greater tolerance of inflation, effectively pledging to keep interest rates low for longer.

Gold should be brought strategically

Gold has always been considered inversely proportional to other assets in its class- equity, debt, real estate etc. Amongst all these, gold has always given better returns during risk-off periods. The reason why gold enjoys a safe haven appeal is that it protects investors’ capital against tail risks and other events that have an adverse impact on capital or wealth.

During this pandemic too, gold has been seen performing significantly well across all asset classes. Precious metals prices continued their three-month long uptrend amid the COVID-19 pandemic. Demand for gold has been buoyed by safe-haven buying and global policy support in response to the pandemic. However, we saw gold fall sharply as the news of Russia discovering a vaccine came in.

The world is eagerly waiting for the discovery of a covid-19 vaccine in the hope that normalcy will return soon after. While experts say that it will definitely boost the economy, the impact may not be positive for all investment asset classes. For instance, gold, which has had a dream run this year, may correct, while equity might see a rally in the short term as it may have already factored in the vaccine discovery event. Experts believe that gold prices may correct post after a vaccine is approved.

Gold had a substantial run over the past one year and as no asset class can move in a straight line forever, gold prices are expected to correct as soon as an approved vaccine is discovered. However, the resurgence of patients in Europe is a brutal reminder that the pandemic is not over yet and that the second wave is only a couple of months away.

Prithviraj Kothari believes that such a second wave would be positive for gold prices. However, it should include the US as well, as the resurgence in cases limited to Europe could strengthen the greenback against the euro and gold, neutralizing the increased safe-haven demand for the yellow metal.

-If the second wave occurs, it should be bullish for gold not only because of the resulting economic slowdown and increased uncertainty but also because of the new stimulus programs that would probably be announced by both by the central banks and the governments.

And hence, sentiments for gold remain bullish. Following these sentiments, Smart investors are rightly buying gold, recognising it to be a hedge and/or a store of value during uncertainty. While demand for jewellery and physical gold has taken a hit, the focus is on the investment forms of gold. Even the central banks of the world, recognising the risk involved, are adding to their gold reserves. Gold, as you may know, plays an important role in central banks’ reserve management.

The top gold dealer in India opines given the on-going extreme turbulence in the equities, gold holds the potential to provide respectable returns.

Precious metals prices are expected to average 13% higher in 2020 relative to 2019 on expectations of strong demand due to heightened global uncertainty and ultra-low real interest rates. Upside risks to this outlook include a second COVID-19 wave causing a sharper-than-expected global slowdown. On the downside, a stronger U.S. dollar could push prices lower.

Particularly now when there is no imminent end to the Covid-19 pandemic, the spotlight will continue to remain on the precious metal.

Until the Covid-19 pandemic is contained and economic uncertainty prevails, the spotlight will continue to remain on gold. It makes good sense to buy gold strategically. The long-term secular uptrend exhibited by gold highlights the importance of owning gold in the portfolio with a longer investment horizon.

Gold looking for guidance from Central bank policy meeting amid 50 Days left for US elections

Gold has taken up a holding position in the $1900s after setting a mark just above $2000 an ounce in August, and this week's Federal Reserve meeting will continue to affect the next step of the haven. The two-day meeting — with the statement and Jerome Powell's Wednesday press conference — It just comes a few weeks after the Fed chief explained the Bank's new approach to fulfilling its dual mandate by embracing a more optimistic approach to inflation. Powell at the time described the long awaited change as "a robust update."

Officials will also update their economic and rate predictions in September, but the framework review may have taken the most of its thunder. U.S. central bankers will measure where they see rates going into 2022 in their common "dot plot" chart, but most Fed watchers and analysts across the world as well as top gold dealers alike have already expected rates remaining at zero well before the Fed's framework review has solidified that hunch.

There’s good and bad news. Before lifting prices, the Fed will be vigilant as it expects the recovery to speed up. But the bad news is that it does not have a lot of ammunition left in its arsenal to support the economy if it winds up in need of more aid — at least in the manner it may need aid. Officers say they 're left with more firepower, and they do.

In addition, the Bank of Japan and Bank of England will take decisions this week, all on Thursday. The US presidency fight is entering the home stretch as the electoral tradition that doesn't have a global peer hits the final 50 days before Election Day. The threats of U.S. presidential elections are expected to be more pronounced in investor decision making when there are now just 50 days until November 3^rd. In commodities, that matters most for gold and silver traders says PrithvirajKothari of RSBL.

With Joe Biden ahead in the polls, Donald Trump has consistently suggested that there will be fraud without proof, claiming mail-in votes would result in theft. That's sparked a tide of chaotic, disputed speculation that unleashes market uncertainty. In recent weeks, Gold 's remarkable, record-setting run has seen its strength wane, even as equities have been rocked by a selloff. The quickly shrinking horizon to Election Day can inject some fresh enthusiasm into the safe-haven, boosting holdings in the ETF.

Why does Silver Outperforms Gold in Bull Market

Silver prices have underperformed gold for most of the time since 2011. In the third week of July 2020 silver prices broke out of the $14 to $20 price range in which they have been caged for the most part since the second half of 2014. After breaking out of this long held range, silver prices raced sharply higher, rising to an intraday high of $29.9 on 7 August basis the nearby active September COMEX contract. If past performance is any indicator, this could be the start of another sharp run up in silver prices. And past performance has been a fairly consistent indicator in illustrating that silver prices outperform gold in a time when gold prices are rising sharply, a gold price rally.

 When using the same dates as gold, silver outperformed gold on every occasion but one (more detailed discussion on this later). When using silver’s troughs and peaks that were close to or ‘in the same cycle’ as the periods of gold price increases, silver always outperformed gold and the percentage gains were also much stronger than when using the other time frame.

There are several reasons why silver often lags gold in starting a major upward price move, but then rises faster in percentage terms. One of the most important is that the silver market is significantly smaller than the gold market. In 2019, for example, the dollar value of the gold market was around 5.5 times that of silver. {The market size for gold and silver is defined here as the summation of annual physical supply (comprised of newly refined mine output, secondary recovery from scrap, and in the case of gold net official transactions in those years when the official sector has been a net supplier of gold to the market), futures and options exchange trading volume, and London Bullion market clearing volumes.}

The top gold dealers of India believes that given the smaller size of the silver market it takes less effort for investors to move the price of the metal higher or lower. The smaller size of the market essentially increases volatility, which while supportive of outperformance compared to gold when prices are rising also adds risk to the performance of silver as a stand-alone asset and to any portfolio in which precious metals are included.

After years of underperformance relative to gold, reflected in the sharp increase in the Gold: Silver ratio, the silver price is now playing catch up with gold. The ratio has slipped lower but is still at historically elevated levels. Furthermore, while the daily gold price broke its past record and already has made several new ones, the price of silver at the height of its current run up on 7 August 2020 at $29.91, still is 39% below its record high in 2011.

The ratio has been at extremely elevated levels in recent years, highlighting silver’s low valuation relative to gold for an extended period of time. In March 2020 the ratio hit a record high. The ratio has corrected from those record high levels but is still at elevated levels, suggesting more potential upside for silver prices relative to gold. It should be understood that there is no magical number at which this ratio should stand. There are no physical, geologic, chemical, electrical, financial, or other reason why gold and silver should be expected to trade at a given relationship to each other.

Gold/Silver Ratio

Sustained dollar weakness is a primary prerequisite for silver beating gold. A greenback bear market would imply some reversion in its top companion for most of the past 10 years -- the U.S. stock market outperforming the world.

Investor sentiment toward silver is turning extremely positive confirmed Prithviraj Kothari of RSBL. This positive investor sentiment is being driven by investors looking for a hedge to the heightened political and economic risks around the world coupled with silver’s relative value to gold. Additionally, the recent break out of silver prices is likely to attract generalist investors looking for relatively undervalued assets to park their funds and the negative yield on the 10-year TIPS certainly makes assets like gold and silver attractive. The upcoming U.S. election, Brexit, deteriorating U.S. –China relations, and the pandemic give further reasons for investors to add gold and silver to their portfolios, which should help sustain the strength in prices.

While silver prices could potentially rise back to their record levels, they may not be able to sustain those high levels for an extended period of time, with some of the shorter term investors locking profits and fabrication demand being hurt by the high price. That said, while prices may not stay at those past record levels for too long and will come off they should not be expected to sink back to the levels experienced in recent years, or even earlier this year, in any hurry. The fallout from the pandemic should help to keep the prices of these metals at elevated levels for a long time.

Gold ETFs attract record inflows in 2020

 

Inflows into gold-backed ETFs have broken all records in 2020, with total holdings reaching an all-time high of 3785 tonnes at the end of July, leaving the value of global assets under management standing at $239 billion. That’s a couple of tons ahead of Germany’s stash. U.S. reserves exceed 8,000 tons.

Global net inflows of 899 tonnes ($49.1 billion) in the year to July are considerably higher than the previous record annual totals and the trend of inflows has continued in the first few trading days of August as the price of gold has breached $2000/oz.

To put these flows and holdings in perspective:

·         ETFs now hold more gold than any one central bank barring the US Treasury.

·         Inflows in 2020 have exceeded the record annual purchases by central banks seen in 2019 of 667t.

·         ETF inflows in the first six months of the year were equivalent to about 40% of new mine supply.

ETF Inflows of last 20 years

There are two principal reasons why ETFs have seen such strong purchases in 2020, both connected to the corona virus.

·         As the global economy tipped into deep recession, falling bond yields – especially negative real US Treasuries’ yields – have driven gold prices higher, encouraging investors to buy gold, sometimes via ETFs.

·         The logistical issues that triggered the dislocation of the COMEX gold futures market from the OTC market centered in London have reduced the attraction of investment on the COMEX futures market, due to increased costs of ownership and higher premiums to the OTC price.

RSBL analysts and investors are so concerned about the global outlook that worldwide holdings in gold-backed exchange-traded funds now stand behind only the official U.S. reserves of bullion after they surpassed Germany’s holdings.

Long term drivers remain intact for gold

 GOLD turned quite bearish over past few days, as the USD surged higher, after losing a lot of ground in the previous weeks. There was not much change in the market sentiment, so the move didn’t come from Gold, but from the USD, since the Buck made some strong gains against all other instruments.

Gold ended a remarkable nine-week rally, as it declined for the first time since June. The yellow metal briefly fell below $1,900 an ounce last Wednesday as stocks neared their all-time closing high and the 10-year Treasury yield jumped on record supply. Wednesday’s $38 billion auction of 10-year government bonds was the largest in U.S. history. The troy ounce of the precious metal closed the week with small losses at $1,940. 

Top gold dealer in India were devastated to see gold dropped to its lowest in over a week and was on its way for a  second straight weekly decline on Friday, as a strong rebound in the dollar and a resurgence in U.S. business activity hurt bullion's shine. 

Prices have witnessed a wave like movement over the week due to 

• weak positioning 

• delayed stimulus package agreement

• a bounce in the U.S. dollar and 

• real rates

Gold reached its life time high but then consolidated last week as news surrounded the onset of corona virus vaccine. Adding to this positive news, were signs of improving global economies as all have entered the unlock phase and reviving towards the path of growth.  Bullions posted consecutive weekly losses for the first time since June. On Monday it headed towards the third decline says RSBL Gold

US markets rallied over Trumps statement of extending support to the economy. 

So, USD index also showed signs of pull back to take out big resistance area at 93.30-93.50. 

Gold prices are quoted lower once more at $1926 an ounce on Tuesday, pressured by a more robust U.S. Dollar. 

This week we have important data releases which might change the momentum for gold- positive or negative would depend on the following numbers- 

• second-quarter GDP data from Germany

• Durable Goods Orders will be featured in the US economic docket

• Jerome Powell, Chair of the Board of Governors of the Federal Reserve System, will be discussing the Fed's monetary policy framework in his opening remarks.

The price of gold consolidated after trading to a fresh record high ($2075) in August, but the macroeconomic environment may keep the precious metal afloat as the Federal Reserve appears to be on track to retain the current policy at the next interest rate decision on September 16 gives relief to top gold dealer in India.

Despite the correction, gold continues to remain bullish over the following drivers-

Inflation- Historically, inflation has been constructive for the gold price. As the purchasing power of the dollar falls, savers and investors may seek other, more reliable stores of value, including the yellow metal.

Debasement of currency-  when a lot of money is printed, the dollar gets devalued and gold rises against the dollar. Gold rallied while debasing the currency as we are printing trillions and trillions of dollars to spur the economy. In the process the dollar comes under pressure and strengthened gold

Interest rates-  Falling real yields and a weakening USD have seen investor demand surge. We see this demand remaining strong for the foreseeable future amid a challenging macro backdrop. The expansion of central banks' balance sheets shows no sign of abating, while US-China tensions escalate. 

This should see interest rates remain low, leaving further upside to gold prices. It’s important to keep in mind, though, that the metal’s long-term drivers remain intact assures RSBL Gold. We have unprecedented monetary and fiscal stimulus, with more potentially on the way.

Important week for gold

 Now that gold has crossed the $2000 mark, investors are expecting it to head towards $3000. 

Gold is in high demand by investors and this is keeping the rally alive in gold. 

Even though gold was pulled down around 2% on Friday, the macro economic factors have still managed to push gold prices higher. Global monetary and fiscal stimulus is the key drive behind gold price rally. 

After a drop in prices this Friday, gold managed to bounce back as the week opened. Gold prices steadied on Monday after a steep fall in the previous session, as concerns over a worseningCOVID-19 pandemic and intensifying U.S.-China tensions underpinned the metal's safe-haven appeal.

In any kind of uncertain financial crisis gold is considered as the best asset to keep inflation at bay. In 2019, after the Federal Reserve signalled that it was suspending plans to push interest rates higher, gold mounted another ascent. Historically, gold has done best when interest rates falling below the rate of inflation. As the inflation-adjusted return on bonds turns negative, investors feel comfortable owning gold as a store of value, even if it yields nothing.

That is what has been happening over the past few months. With bond yields near zero in the United States and negative in Europe and Japan, investors have driven up the price of gold more than 30 percent this year after a gain of nearly 20 percent last year. In recent weeks, that surge has been turbocharged by growing expectations that all the money governments are pumping into their economies will reignite inflation.

Currently the need of the hour is to stabilise economies by providing financial support. And in the need to do so, gold and silver are going up. Printing of money is positively affecting precious metals stated Mr Prithviraj Kothari of RSBL. 

As interest rate go lower or negative, investors have money in the bank that will be essentially taxed as they’d have to pay interest on it.  This is why people are buying gold, taking delivery of gold bars, and buying future

On one hand we have the uncertainty of the virus and on the other hand, we have the fiscal stimulus negotiations. The passage of another major stimulus package would likely mean more money printing, weaker U.S. dollar, and higher gold.

This week has a lot in store for gold-

Another major driver for gold next week will be rising tensions between the U.S.-China, especially after Trump signed a pair of executive orders that prohibit U.S. residents from doing business with China’s TikTok and WeChat apps.

Important data releases- the U.S. PPI , the U.S. CPI , the U.S. jobless claims,  the U.S. retail sales and industrial production data on Friday.

U.S. President Donald Trump said that he might be getting involved if no agreement is reached by signing an executive order to extend enhanced unemployment benefits and impose a payroll tax. 

Furthermore, U.S. President Donald Trump signed executive orders on Saturday partly restoring enhanced unemployment payments to the tens of millions of Americans who lost jobs in the pandemic, as the United States marked a grim milestone of 5 million cases.

RSBL as well as all the top gold dealers of India are planning to keep a close watch on the important numbers being released this week as it will create a significant impact on gold and silver. 

The situation can't get more supportive for gold

Well to begin with, my last blog has justified its title- Will gold cross its life time high? Yes, it did and how. It managed to breach $1917 and create fresh highs at $1955 on Thursday. 

Amid profit taking and as investors’ appetite for riskier assets improved after the Federal Reserve pledged to use all the tools to support the US economy, US policymakers left monetary policy unchanged and warned that the ongoing public health crisis will weigh heavily on economic activity, employment, and inflation in the near term, and poses considerable risks to the economic outlook over the medium term. Also, traders continue to monitor negotiations on the $1 trillion stimulus package proposed by Senate Republicans on Monday, rising coronavirus infections and US-China tensions.

Gold is on course for its biggest annual increase in more than a decade, driven by concern over the coronavirus pandemic and damage to economies, with gains supported by negative real yields and a weaker dollar. 

The dollar ’s slide comes as the U.S. lags most of the world in controlling the spread of COVID-19, and some expect the country ’s economic recovery to lag others, including Europe. The prospect of mounting U.S. deficits as a result of continued fiscal stimulus and ultra-low U.S. interest rates have also put the dollar under pressure.

U.S.D index at 93.6, fell more than 6-7% in the past 6 months and with pandemic and bitter U.S- China relations, there is increased historical pressure on USD to sustain its global currency status.  Riding on the dollar weakness, gold has managed to rise by $500 in the past 5-6 months. December contract hit $2000 an ounce and thereafter we had a massive profit taking to drop by $75, though it showed recovery again. 

The much awaited FOMC meet, proved to be more or less neutral for gold. Fed’s chairman Powell was vocal in saying that their efforts on to every possible support as and when desired for the ailing US economy. So, this is a clear sign that US economy is going to see more plunging as Covid related issues are hurting the growth very severely. 

We are already in a bull run that has started swiftly since the past 6 months and is expected to continue for long, a fact very strongly believed by the bullion king of India. There could be a correction of $70-$80. All the top gold dealers of India are convinced that if the global economic scenario continues to remain weak then the sentiments continue to remain bullish. Gold is also rising because investors are seeking havens as the virus ravages the global economy. 

The situation can’t get more supportive for gold. The low interest rates will give you a benign dollar and a benign dollar is very helpful to gold prices because it makes it much more affordable globally.

Gold continues to an investors favourite

As we all know, gold bas outperformed many assets in the current year. Gold is up about 19% so far this year, as lower interest rates and central bank stimulus have supercharged existing upward momentum for the precious metal.

According to many analysts, the one factor that will continue to drive gold prices higher in the near term is further weakness in the U.S. dollar as the current embarks on a new downtrend.

Gold is typically seen as a “safe haven” asset in times of uncertainty because it is less volatile than other investments, like stocks. What’s more, the metal moves inversely to the U.S. dollar, meaning that when the greenback moves lower — as it has done lately — gold moves higher.

Gold is benefitting from the geopolitical situations and the pressure that has been created worldwide.

Globally, gold prices edged lower on Monday due to a stronger US dollar, but worries over surging Covid-19 cases and its impact on the global economy kept the safe-haven metal above the psychological level of $1,800 per ounce.

Though gold was struggling to keep momentum above $1800, several analysts as well as the top gold dealers in India believe that market has a lot of upwards potential and support for gold.

The gold market is consolidating above $1,800 an ounce and although bullish sentiment has fallen from record levels, market analyst and retail investors remain bullish on prices next week.

Major economies have been struggling on the path of development and are constantly announcing new stimulus measures to support the economy. The virus continues to weaken the global scenario, but U.S and Europe have been trying to pump in fiscal stimulus to keep the growth going. This step will weigh on the U.S. dollar and support gold prices.

Although there is strong sentiment in the marketplace, some analysts and industry insiders from RSBL have noted that a correction would be healthy following break above long-term support.

U.S markets are languishing for the past 2-3 days and with no major economic data expected till Wednesday, gold and silver are expected to maintain the same stance- mild pull back and positive momentum.

Small dips can be considered as an opportunity to add gold to your portfolio confirms Mr Prithviraj Kothari of RSBL

The precious metal has reached a new range of $1,750-$1,830 in July, up from the May-April range of $1,668-$1,750, If gold break the upside, then $1,850 and even $1,900 is possible.

Right now, gold is consolidating but we can see higher prices next week as major data is expected to be released after Wednesday.

·         U.S House price index

·         U.S. existing and new home sales

·         U.S latest jobless claims

·         U.S Manufacturing PMI

All the above-mentioned data is important and needs observation as it will give investors an idea whether we are seeing an actual recovery or not.

Currently gold prices are benefiting from

·         loose monetary policy,

·         low real yields,

·         record inflows into exchange-traded funds

Gold is expected climb to an all-time high in the next six-to-nine months, and there’s a 30% probability it’ll top $2,000 an ounce in the next three-to-five months.

If gold can break the $1,829 resistance, then the precious metal could be heading for its all-time highs.