Gold prices reversed losses and rallied as the focus has shifted to the US fiscal stimulus progress, more lockdowns, and the last Federal Reserve meeting of the year. The bullion has resistance at $1875 and it needs to break that level to gain ground. The metal has been unable tp breach this level since November. US 10-year bond real yields are back below -1.0 per cent, giving boost to precious metals. This dip in real yields is being driven by rising inflation expectations, leading to higher nominal yields.
There has been some progress on the US fiscal stimulus front as Congress continued negotiations. We believe gold has legs till $1875 and needs strong to break level of $1900. Currently, gold is seeing a pullback after it suffered losses last week. We will see more long positions being added above $1900. Vaccine rollout might stop next wave but could not help in this wave and therefore gold is rising as more countries are imposing lockdown. Currently the only threat for gold is equity market.
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First Published: Thu, December 17 2020. 07:12 IST