Will gold price breach lifetime high?

Gold pricing is in a shambles due to the Omicron problem. On Friday, the February future contract on the MCX (Multi Commodity Exchange) rose 524 per 10 gm and closed at 47,925 per 10 gm, a 1.11 percent intraday gain. The strong gain in gold has spurred speculation that bullion may re-emerge as an investment sanctuary in the wake of the Omicron virus scare. Rising global inflation, rupee devaluation against the US dollar, and industrial need for gold and silver, according to commodity market experts, are already driving demand for gold and silver. As a result, if the Omicron virus cases continue to rise for an extended period of time, the gold and silver prices may continue to rise.

“There is a concern about the mutations in the Omicron virus, and it needs further research to determine how much of an impact it can have,” Amit Sajeja, Vice President Of Commodity Research at Motilal Oswal, said in response to the gold price prognosis on the Omicron virus fear. Due to the additional uncertainty, gold is expected to find support on declines, and a short-covering move towards $1830 per ounce might be observed in the following 3-4 weeks. However, due to the US Fed’s recent hawkish posture, immediate gains may be constrained.” According to Motilal Oswal’s Amit Sajeja, gold prices in the spot market might reach $1835 per ounce by the end of December 2021, while the yellow metal could reach 48,800 to 49,000 per 10 gm on the MCX.

Gold has good support at $1760 per ounce levels, according to Motilal Oswal commodity specialists, and is currently bouncing around $1775 per ounce levels, with a very high risk-reward ratio (1:3). He predicted that gold prices in the spot market will rise to $1,915 per ounce in the following two to three months. He expects gold to climb more than silver since the rupee is expected to fall further against the US currency.

 

“Gold prices are currently in a choppy zone due to the murky fundamentals post-spread of the Omicron virus,” Ravi Singh, Head of Research & Vice President at ShareIndia, stated. The Fed’s early tapering to control inflation is riding gold sentiments among traders who are waiting for WHO recommendations on the Omicron virus to have a clearer idea of the infection’s severity. Technically, gold is taking support from 47,000 to 46,800 levels and appears bullish in the short term, with a target of 49,000. High volatility and demand for safe haven may push gold to 52,500 per 10 gm levels if the Omicron virus spreads widely.”

“Omicron virus has spread in so many nations and due to its expanding influence, the probability of reinforcing the safe-haven demand may increase,” said Abhishek Chauhan, Head of Commodity & Currency at Swastika Investmart, when asked how big of an impact the virus will have on gold prices. Omicron cases have also been discovered in India, where affected patients had no prior travel history, indicating that the disease’s spread is likely to be rapid. If the virus’s impact grows in the next days, the price of gold may be supported. There are currently no deadly repercussions, but it has the potential to reduce the economy’s speed, which could enhance demand for precious metals investment.”

Gold prices, however, may remain under pressure for a long, according to Abhishek Chauhan, because the US Fed has signalled that asset shortages and interest rate hikes may accelerate sooner than planned to relieve inflationary pressures. Meanwhile, according to US data issued on Thursday, 2,22,000 initial unemployment claims were made during the week, which was higher than expected. The dollar stays strong against gold, but US bond yields remain unpredictable.

 

“The present pandemic crisis may bolster gold prices, while central banks’ efforts to contain increasing inflation may restrict gold’s upside.” However, the technical chart suggests that gold prices could touch 50,000 to 52,000 levels in the next months,” said Swastika Investmart’s Abhishek Chauhan.

As a result of the Omicron virus pandemic, gold prices are projected to rise sharply in the next months, maybe reaching 52,000 per 10 gramme levels. However, whether it can break its lifetime high of 56,191 per 10 gm on MCX is very dependent on how the Omicron virus behaves in the coming weeks.

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