Informist, Thursday, Apr 1, 2021
By Roshni Devi and S. Anirudh Iyer
MUMBAI – A firm US dollar and the continuous rise in treasury yields may continue to weigh on the prices of gold. Prices of the safe-haven metal are likely to decline for the fourth straight month in April despite a resurgence in
COVID-19 infections.
Informist polled 11 traders and analysts, of which nine expect prices to extend losses this month. The average forecast for gold futures was at 43,000-45,500 rupees per 10 gm on the Multi Commodity Exchange of India, and on the COMEX, the contracts are seen at $1,640-$1,760 an ounce.
Currently, the most-active June gold contract was around 44,992 rupees per 10 gm on MCX and at $1,712 an ounce on the COMEX. Earlier this week, prices had hit an eleven-month low of 43,320 rupees per 10 gm.
This week, the dollar index rose to an over four-month high and the yield on 10-year benchmark US Treasury note jumped to a 14-month high of 1.774%. Rise in yields make treasuries more appealing than gold as a hedge against inflation.
Increasing optimism over the recovery of the US economy is likely to be negative for gold.
US President Joe Biden announced a $2.3-trln infrastructure plan on Wednesday. The proposal aims to rebuild roads and bridges, and set up public transit, electric vehicle charging stations and water pipes and sewers.
If Biden is able to enact his infrastructure plan and economists are correct, it will push growth above 6% and certainly continue to put pressure on gold prices, Kitco News reported.
Biden, while unveiling the plan, said the number of pharmacies where coronavirus vaccinations are available will double, and 90% of adults will be eligible for the vaccine by Apr 19.
"For as long as the current market environment remains unchanged, we believe that gold will find it hard to regain any lost ground," Daniel Briesemann, analyst at Commerzbank AG, said in a note.
Gold prices in local and global markets fell around 13% from the highs they touched in January.
"Gold investors are disappointed with the recent US Federal Reserve view on inflation, and many global central banks are now talking to limit expansionary monetary policy," said Abhishek Bansal, chairman and founder of Abans Group.
However, the pandemic is expected to limit the fall in gold prices. The total number of COVID-19 cases across the world surpassed 128.8 mln, with more than 2.82 mln deaths, according to the Johns Hopkins University.
Despite the rise in the number of people getting vaccinated, Europe and India have been witnessing a surge in infections. Many countries in Europe and cities across India have imposed restrictions to curb the spread of the coronavirus.
"Gold appears comfortable at current price levels," said Suki Cooper, analyst at Standard Chartered, in a report on Kitco News. "Physical demand offers a cushion on the downside, but a macro catalyst to drive upside risk is absent."
Gold demand in India has revived with the recent slump in prices and is expected to remain firm for three-four weeks. With some regional new year celebrations slated this month, consumer buying may remain robust.
"Rural demand has picked up more and will remain good because of Gudi Padwa, Ugadi, Vishu, Navratri and other new year celebrations. But demand from urban areas may suffer because they are most affected by the pandemic," said Haresh Acharya, managing director of Gujarat-based Parker Bullion.
The following is a summary of the poll by Informist on gold prices in April and details of estimates by respondents, in alphabetical order:
| ANALYSTS/TRADERS | DOMESTIC PRICE | INTERNATIONAL PRICE |
| (rupees per 10 gm) | ($ per ounce) | |
| ABans Group | 42,500-45,500 | 1,612-1,735 |
| Aditya Birla Money | 42,500-45,800 | 1,640-1,750 |
| Angel Commodities | 43,000-45,500 | 1,660-1,720 |
| HDFC Securities | 43,500-45,600 | 1,640-1,740 |
| Kedia Comtrade | 43,000-45,800 | 1,650-1,750 |
| Kotak Securities | 43,800-45,300 | 1,650-1,760 |
| LKP Securities | 43,700-45,200 | 1,655-1,715 |
| Moneylicious Securities | 43,800-45,500 | 1,640-1,760 |
| Parker Bullion | - | 1,600-1,700 |
| Reliance Securities | 43,000-46,200 | 1,640-1,760 |
| Umedmal Tilokchand Zaveri | 43,000-45,500 | - |
End
US$1 = 73.11 rupees
Edited by Nidhi Chugh
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