?||Is it right time to buy gold?
Buoyed by a combination of supportive factors, both gold and silver have reached unprecedented levels too much, too soon which calls for utmost caution on the part of investors and buyers.
On Monday, gold breached the September 2011 high of $1,898 an ounce to reach a new high of $1,980, while silver continued its even more spectacular rally to cross $26/oz, a seven-year-high.
Weak $, Sino-US tension
Apart from uncertainties of economic growth triggered by the Covid-19 pandemic, renewed geopolitical tensions between the US and China as also currency debasement caused by ultra-loose monetary policy, especially in the United States, are seen driving the precious metals complex higher.
The US dollar has weakened to a nearly two-year low position. Real interest rates are in the negative territory. No wonder, gold is reasserting its haven status.
A slight weakness in the stock market, too, aided the precious metals. Inflows into gold ETFs and silver ETFs are accelerating. Last week alone, 55 tonnes of gold and over 1,200 tonnes of silver flowed-in as gold rates soared by over five per cent. Silver gained a spectacular 17 per cent, suggesting a massive weekly gain not seen in 30 years.
Any spectacular commodity rally unsupported by market fundamentals but based purely on short-term speculative considerations is sure to peter out sooner or later. Precious metals will be no exception.
Muted physical demand
At these astronomical prices there is not even a semblance of physical demand in two of the worlds largest gold markets China and India. Demand has all but vanished as rates in local currencies have become unaffordable. India is going through a crisis situation with shuttered factories and massive job losses. Rural areas are busy with agricultural operations.
According to reports, China Gold Association has estimated a 38 per cent fall in physical demand year-on-year in the first six months of 2020. The outlook for the second half of the year is weak too at the current high prices.
https://www.thehindubusinessline.com/markets/commodities/gold-in-stratosphere-warrants-utmost-caution-correction-ahead/article32212571.ece#:~:text=Buoyed%20by%20a%20combination%20of,part%20of%20investors%20and%20buyers.&text=If%20anything%2C%20gold%20and%20silver,signs%20of%20correction%20are%20unmistakable.
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?||Is it right time to buy gold? Buoyed by a combination of supportive factors, both gold and silver have reached unprecedented levels too much, too soon which calls for utmost caution on the part of investors and buyers. On Monday, gold breached the September 2011 high of $1,898 an ounce to reach a new high of $1,980, while silver continued its even more spectacular rally to cross $26/oz, a seven-year-high. Weak $, Sino-US tension Apart from uncertainties of economic growth triggered by the Covid-19 pandemic, renewed geopolitical tensions between the US and China as also currency debasement caused by ultra-loose monetary policy, especially in the United States, are seen driving the precious metals complex higher. The US dollar has weakened to a nearly two-year low position. Real interest rates are in the negative territory. No wonder, gold is reasserting its haven status. A slight weakness in the stock market, too, aided the precious metals. Inflows into gold ETFs and silver ETFs are accelerating. Last week alone, 55 tonnes of gold and over 1,200 tonnes of silver flowed-in as gold rates soared by over five per cent. Silver gained a spectacular 17 per cent, suggesting a massive weekly gain not seen in 30 years. Any spectacular commodity rally unsupported by market fundamentals but based purely on short-term speculative considerations is sure to peter out sooner or later. Precious metals will be no exception. Muted physical demand At these astronomical prices there is not even a semblance of physical demand in two of the worlds largest gold markets China and India. Demand has all but vanished as rates in local currencies have become unaffordable. India is going through a crisis situation with shuttered factories and massive job losses. Rural areas are busy with agricultural operations. According to reports, China Gold Association has estimated a 38 per cent fall in physical demand year-on-year in the first six months of 2020. The outlook for the second half of the year is weak too at the current high prices. https://www.thehindubusinessline.com/markets/commodities/gold-in-stratosphere-warrants-utmost-caution-correction-ahead/article32212571.ece#:~:text=Buoyed%20by%20a%20combination%20of,part%20of%20investors%20and%20buyers.&text=If%20anything%2C%20gold%20and%20silver,signs%20of%20correction%20are%20unmistakable.