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Why Is The Gold Price Losing Momentum?

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By Author: Divya
Total Articles: 9
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The love that India holds for gold is overwhelming and this can be attributed through the consumption of its people. The unconditional love harbored can only be explained through the continuous demand for the yellow metal despite the rising prices. Gold prices saw an all-time high during the pandemic in August. With prices reaching at 57,500 Rs per 10 grams, Indians were in for a rude shock, hoping for the metal to lose price and gain stability in the near future. While international rates remained steady, gold futures on the MCX for December delivery quoted a 0.11% decline. The rising price or the instability did not hinder people from buying gold. Gold continues to enjoy its favourite position with the people despite the ups and downs. In fact, the situation is such that wedding season has boosted demand as well as sale in the Indian market. This however, raises the question as to why is gold losing momentum?

It is true that the key to determining the gold price rests with the international market. Uncertainty always ...
... boosts risks which in turns affects the price of the gold. This year the Corona Virus led to a year of uncertainty, engulfing the world and breaking down the backbone of every economy. With stock market crashing and oil prices going in the negative investors rushed to the safe haven asset of gold ensuring their wealth is parked. However, the international markets are gaining stability due to the stimulus packages rolled out by the government to strengthen the economy. Amidst all the uncertainty the hope of the vaccine and its approval for trial by various countries saw economies reviving and the dollar regaining its strength thereby the yellow metal losing its shine. The buying of gold in the country has however not seen much decline, due to the ongoing wedding season.

The major events that resulted in gold dipping has been the following:
The breakthrough reached by the US government in the bipartisan deal. With the Republics and Democrats arriving at a consensus America is seeing the hope 900 billion dollars pumped into the economy which would be a major boost for it. This will alter the stock markets and hopefully, gold futures will continue to see a decline.
This week Britain is expected to strike a post-Brexit deal with the European Union despite the current impasse. This should cause ripples world over affecting numerous economies. The FOMC meet and its conclusion over the last year has been considered positive which should definitely reinvigorate the economy.
It is believed that gold will continue to rally and prices in the international markets will hover around anything between 1800$ to 1900$ ounce. If trade analysts and their predictions are to be believed than buying gold should be on the cards as the yellow metal back to the highs of 1900$ ounce.

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