NEW DELHI: Today is Akshaya Tritiya, considered an auspicious occasion for buying and gifting gold.
While gold prices are off their record highs, some analysts believe those who missed the gold rally in 2020 could look to buy the yellow metal at current prices, as the outlook looks positive.
Some technical analysts project gold price to rise as high as Rs 56,500 in 12-15 months. They say fundamentals remain supportive of gold.
Akshaya Tritiya, also known as Akha Teej, is an annual springtime festival of the Hindus and Jain. It is believed worshipping on this day can bring good luck and success. Many Hindu and Jain families buy gold on this occasion.
Tritiya Tithi begins at 5:38 am on May 14 and ends at 7:59 am on May 15.
“Historically, gold prices have shown a rising trend during this festival. There are only fewer cases when the prices have consolidated or traded sideways on Akshaya Tritiya. Going with the historical trend, and the current fundamental and technical setup, the prices could maintain the upside momentum,” said Motilal Oswal Securities.
Prices of the yellow metal have recovered some ground after correcting steeply from the high of Rs 56,191-odd level. At Rs 47,600 per 10 gm, Angel Broking says gold prices are hovering above 10- and 50-EMA on a quarterly basis, which shows optimism in long-term trend. Technical indicator MACD is showing a positive divergence, which also supports the bullish trend, they said.
“Looking at the positive chart structure and indicators showing optimism, we recommend buying gold. The short-term consolidation in prices around the lifetime high suggests the bullion is trying to rest in the bull rally and is waiting for further correction in the Dollar Index. Any correction towards the support levels may create an opportunity to buy gold,” the brokerage said.
It sees resistance for MCX gold in the Rs 51,200-51,700 range, and a breaching of this range can cause the yellow metal to test the Rs 54,700 level. Support is seen at Rs 44,100, Rs 43,600 levels.
Since the peak levels of November 2020, AUM gold ETF has fallen nearly 14 per cent; 8 per cent due to outflows and 6 per cent due to a correction in gold price in dollar terms.
On the positive side, central banks continued to be net purchasers of gold in 2020, and they will continue to favour gold as a part of their reserves in 2021, showed a survey by the World Gold Council.
In the survey, 75 per cent of participants said they believe global central bank gold holdings will increase in the next 12 months compared with 54 per cent last year.
At home, the Covid pandemic continues to impact the demand-supply dynamics of the precious metals.
“The import duty cut declared in the Union Budget weighed on the prices and encouraged jewellers to import more. The effect of the same can already be seen in the March import numbers, which hit 160 tonnes, up almost 470 per cent from previous year. Strong fundamentals are helping gold gain momentum,” Motilal Oswal Securities said.
Kshitij Purohit, Lead Commodities & Currency at CapiatlaVia Global Research, said gold prices have rallied after making a strong base near the Rs 44,500-45,000 zone.
“Investor should buy and hold gold for the medium to long term, as the market is looking strong due to mixed US economic data. Comments from the Fed officials have eased market nerves about potential monetary tightening. General optimism about the US economy amid progress of vaccination and improvement in virus situation may continue to support gold. Technically, gold has made a ‘Cup and Handle’ chart pattern, which sets the short-term target at Rs 49,700. In the medium term, investors can gradually add gold for a target of Rs 51,700 in the coming month,” he said.
Motilal Oswal said central banks have started to buy gold again and such buying in the future is likely to keep the prices elevated.
This brokerage sees immediate target for domestic gold at Rs 50,000 and expect a higher target of Rs 56,500 in 12-15 months.