Gold prices off Rs 1,600 from all-time high, slip below Rs 55,000 per 10 gm; here’s what pushing down prices

Gold prices fell on Tuesday on the back of profit booking after a sharp rally in the prices in the previous sessions. Meanwhile, coronavirus cases continue to rise in India and elsewhere. The total number of COVID-19 cases in India are over 22 lakh with more than 45,300 deaths, so far. On MCX, gold October futures fell Rs 422 or 0.77 per cent to trade at Rs 54,524 per 10 grams, while silver September futures declined Rs 823 or 1.09 per cent to rule at Rs 75,010 per kg. Analysts say gold prices declined on a rebound in the dollar, and focus will remain on worsening US-China trade tensions. “China imposed sanctions on 11 US citizens, including lawmakers from the President’s Republican party, after Washington’s sanctions on Hong Kong officials last week. Sentiment in gold remains positive but technical correction can not be ruled out,” said Jigar Trivedi, Fundamental Research Analyst, Anand Rathi Shares and Stock Brokers.

Gold prices have rallied over 45 per cent from March lows of Rs 38,500 per 10 grams. While silver rates have climbed 132 per cent from Rs 33,580 per kg touched in March this year. Last week, gold prices hit an all-time high of Rs 56, 191 per 10 grams, and silver rallied to a record high of Rs 77,949 per kg.

What do the charts say?

It might be early to say the near term top has been established but daily close below $2000 could confirm gold has made temporary top near $2075 and beginning of sideways consolidation, says Bhavik Patel, Senior Technical Research Analyst at Tradebulls Securities. “After making all-time high around $2075, gold’s next candlestick pattern was a large bearish engulfing pattern which suggests a top but confirmation will only come below $2000,” Patel added.

What pushed gold price down?

Analysts say that China imposing personal sanctions against US politicians in retaliation for US action in Hongkong and visiting Taiwan have stroked investors’ preference towards the safety of the US dollar thus making gold lose some of its shine. “US real interest rates have also risen the most in a month after stronger than forecasted July jobs and so gold could not hold on to its gain against rising US real interest rate and US dollar,” Patel added.

Time for profit booking in gold, silver

Even as trends in bullion are positive, analysts warn traders to take a cautious approach while taking any position on bullion on higher levels. “We expect some profit booking in gold and silver as in the physical market people are selling their ornaments and bars and booking profit. Gold may test Rs 53000 levels and silver Rs 71000 levels in short-term towards the downside,” said Anuj Gupta, DVP- Commodities and Currencies Research at Angel Broking.