Omicron crisis: The February gold price futures contract on MCX (Multi Commodity Exchange) rose on Friday ??524 per 10 g and closed at ??47,925 in 10g levels, registering an intraday gain of 1.11%. This sharp rise in the yellow metal has fueled speculation that bullion will reappear as a haven for investors following concerns about the Omicron virus. According to commodity market experts, rising global inflation, the depreciation of the rupee against the US dollar, and industrial demand for gold and silver are already creating demand for gold and silver. So gold and silver prices could rise further north if Omicron virus cases continue to rise for a longer period.
Speaking on the Gold Price Outlook on the Omicron Virus Problem; Amit Sajeja, Vice President of Commodity Research at Motilal Oswal, said: âMutations in the Omicron virus are causing concern and more research is needed to understand the impact it can have. The price of gold is likely to find support if it falls. due to this new uncertainty and a short hedging move towards $ 1830 an ounce could be seen in the next 3-4 weeks. However, due to the recent Hawkish stance taken by the US Fed, the immediate rise may also be limited. Amit Sajeja of Motilal Oswal said that by the end of December 2021 the price of gold in the spot market could reach $ 1,835 per ounce while on MCX the yellow metal could reach ??48,800 to ??49,000 per 10 g. “
Commodities experts at Motilal Oswal said gold is enjoying strong support at levels of $ 1,760 an ounce and is currently hovering around $ 1,775 an ounce where the risk-reward ratio (1 : 3) in gold is very high. He said that over the next two to three months, the price of gold in the spot market could reach $ 1,915 an ounce. He expects more rally in gold against silver as the rupee is also expected to depreciate further against the US dollar.
On the Triggers of the Gold Price Rally; Ravi Singh, head of research and vice president at ShareIndia, said: âGold prices are currently in a volatile area due to ambiguous fundamentals after the spread of the Omicron virus. traders waiting for WHO guidelines on Omicron virus to better understand severity Technically, the price of gold is gaining support at ??47,000 to ??46,800 levels and looks bullish for the goal of ??49,000 in the immediate short term. If the Omicron virus outbreak becomes widespread, high volatility and demand for safe-haven securities could push gold to ??52,500 per 10g level. “
On the impact of the Omicron virus on the price of gold; Abhishek Chauhan, Head of Commodities and Currency at Swastika Investmart, said: âThe Omicron virus has spread to many countries and, due to its growing influence, the possibility of increasing demand for safe havens may increase. . Omicron cases were also found in India, as those infected, had no travel history, due to which the speed of its spread is believed to be rapid. If the effect of the virus increases in the next few days, then it can support the price of gold. From now on, there are no more fatal consequences, but it is able to slow down the pace of the economy, due to which the demand for investment in precious metals may increase. “
However, Abhishek Chauhan said gold prices could remain under pressure for some time as the Fed indicated that asset shortages and interest rate hikes could accelerate sooner than expected to mitigate inflationary pressures. Meanwhile, US data released Thursday showed 2,22,000 initial jobless claims were filed throughout the week, better than expected. Against gold, the dollar remains strong while US bond yields remain volatile.
âThe current pandemic situation may support gold prices while central bank efforts to control rising inflation may limit the rise in gold. However, the technical chart shows that gold prices ‘gold can test ??50,000 to ??52,000 levels in a few months, âconcluded Abhishek Chauhan of Swastika Investmart.
So, after the outbreak of the Omicron virus, the price of gold is expected to experience a marked bullish movement and it could rise up to ??52,000 in 10g levels in a few months. But, if he would be able to break his lifespan record of ??56,191 per 10 g on MCX, it all depends on the evolution of the Omicron virus over the next few weeks.
Disclaimer: The opinions and recommendations expressed above are those of individual analysts or brokerage firms, not Mint.
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