Gold hits record high as virus fears, weaker US dollar boost demand

Marco Green
August 3, 2020

Gold prices in India on August 3, 2020 hit price over Rs. 54000 per 10 gm for the first time in futures market.

The rise in the price of Gold may continue as long as the Relative Strength Index indicator holds above 70 levels, coupled with the Exponential moving averages displaying a bullish outlook as the 9 periods EMA at $1,930 and 21 periods EMA at $1,871 price levels. Silver futures on MCX today rose ₹700 or 1.1% to ₹65,690 per kg. Silver in line also jumped by close to 1% and last traded at Rs. 65564 per kg. In the previous session, gold had hit a high of ₹53,700 per 10 gram.

Gold rose to an all-time high on Monday (Aug 3) as a softer USA dollar and fears over the global economic fallout from surging coronavirus cases lifted demand for the safe-haven metal.

The coronavirus has infected 4.6 million people in the United States and more than 17.96 million people globally.

With that said, the extreme reading in the RSIalong with the crowding behavior in the US Dollar may push bullion towards the $2000 mark, and the low interest rate environment along with the ballooning central bank balance sheets may continue to act as a backstop for the price of gold as market participants look for an alternative to fiat-currencies. "The currency has come under pressure amid worries over that USA economy may underperform its developed peers as coronavirus cases continue to surge in the nation", Kotak Securities said in a note. "Furthermore, the currency also was pressurized following US President Donald Trump's suggestion of delaying the nation's November presidential election until after the coronavirus pandemic eases", it added.

The gold price gained over 80% of the trading days in July.

The US is in a new phase of the novel coronavirus outbreak with infections "extraordinarily widespread" in rural areas as well as cities, White House coronavirus experts said on Sunday.

On the USA stimulus front which is being deliberated the White House Chief said he was not positive on reaching the agreement soon on a deal for the next legislation round to extend relief to the U.S. countrymen.

Other reports by Click Lancashire

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