Tri Une Impex Consultant

*Good news extended from India physical gold sold at a $1 premium ahead of key festivals

*Gold which has gained over 27% so far this year

Bullion market are up on the hope that more fiscal stimulus is coming but it’s just hope, as communication from Washington has become somewhat erratic. Comex gold futures was down at $1915 per ounce on Tuesday, after hitting its highest level since Sept. 21 at $1,939 in the intraday Monday.

We’ve seen a bit of a modest dollar rebound, I’m still very much of the opinion that we need to buy in the dip as, ultimately, the prospect of further stimulus post the US election is helping support gold prices, said spequnomist Kushl Thakar.

We are in a wait-and-see scenario, as investors try to understand what is going to happen in early November with the U.S. election and the subsequent reaction of both stocks and currency markets.

Meanwhile, the good news extended to physical gold in India. Jewelers saw physical gold sold at a $1 or $2 premium this week for the first time since mid-August, ahead of key festivals in the country that could entice customers back into stories.

Gold, which has gained over 27% so far this year, tends to benefit from stimulus spending because it is considered a hedge against inflation risks and currency weakening. It is also in demand at times of heightened market uncertainty. Bullion investors are digesting President Donald Trump’s $1.8 trillion package, proposed on Friday during talks with House of Representatives Speaker Nancy Pelosi.

Although closer to the Democrats’ preferred price tag of $2.2. trillion, some of Trump’s fellow Republicans are reluctant to add to the growing U.S. debt pile ahead of the Nov. 3 presidential elections. Across the Atlantic, the European Council will meet from October 15 to 16, and investors will be looking to whether the European Union and the UK can reach a Brexit deal ahead of Prime Minster Boris Johnson’s self-imposed Oct. 15 deadline.

Johnson also told French President Emmanuel Macron on Saturday that Britain will explore every avenue for a trade deal but warned that progress to bridge significant gaps needs to be made in the coming days. The US Commodity Futures Trading Commission said on Friday that investors increased their bullish positions in COMEX gold and cut them in silver contracts in the week to Oct. 6.

Gold imports by India slumped in September after a short-lived rebound as high prices prompted buyers to defer purchases. Inbound shipments into the world’s second-biggest bullion consumer fell 38% in September from a year earlier to 8.4 tons. Imports were down from 35.5 tons in August.

(Disclaimer: This analysis is only for educational purpose and is not and must not be construed as investment advice. It is analysis based purely on economic theory and empirical evidence. Readers are requested to kindly consider their own view first, before taking any position.) Date: 13-10-2020

Samarth Mercantile

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