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Below are Views On Gold to move higher towards 47000 mark By Mr. Prathamesh Mallya, AVP- Research, Non-Agri Commodities and Currencies, Angel Broking Ltd

Gold prices have declined2.6 percent in the international markets and 2.3 percent on the MCX futures in the time period 18^th June to 6^th August 2021. The fall in the prices of the yellow metal in the recent weeks is due to combination of factors ranging from increasing cases of COVID-19, delta variant cases, dovish tone by the US FED on tapering the Quantitative Easing, lower bond yields in the US, good non- Farm Payrolls data, and the factors alike.

Investors interest rise in the Yellow Metal

Rising coronavirus cases across the United States and other countries fuelled fears of a pandemic resurgence, sending shockwaves through stock markets, as the highly contagious Delta variant appeared to be taking hold.The US FED Chair Jerome Powell in its recent FOMC meeting concluded on July 30, said that the U.S. job market still had some ground to cover before the Fed would pull back support. 

Moreover, uncertain global growth outlook and a reaffirmed commitment by central banks to continue easy money policies despite elevated inflation, led to inflows in to the gold ETF’s. Flows into global gold ETFs were marginally positive in July, with inflows of 11.1 tonnes (t) (US$669mn, +0.3% AUM). Overall, Global Assets Under Management (AUM) stand at 3,636t (US$214bn),1 approximately 7% below the October 2020 record tonnage high of 3,909t.2

The job prospects look better in US

The employment prospects in the US have shown signs of improvement with the recent Non-Farm Payroll data that was released on 6^th August 2021 by the U.S. Labor Department showed U.S. employers hired the most workers in nearly a year in July and continued to raise wages.

Nonfarm payrolls increased by 943,000 jobs last month, the largest gain since August 2020. Data for May and June were revised to show 119,000 more jobs created than previously reported. The unemployment rate dropped to a 16-month low of 5.4%. That underscored remarks by Fed officials suggesting a sooner than anticipated roll-back of pandemic-era stimulus on the back of a solid labour market recovery.

Money managers are dumping gold in the past few weeks

The net longs in the recent weeks has seen consolidating at 1,06,662 contracts as on 3^rd August 2021 when compared to 1,08,815 contracts as on 20^th July 2021. The fall in net longs is an indication of fund managers sentiments dampening in the yellow metal, which can lead to further bearishness in the yellow metal in the weeks ahead.

What now, where is the gold headed?

There are contrasting factors at play in gold markets. On one hand, we have delta variant covid cases creating havoc while the recovery in labor markets might lead the fed to taper sooner than market expectations is creating a dilemma for investors who are longs in gold market.

Whatever is the scenario, one has to accumulate gold at every dips, and the recent correction in gold prices have given favourable opportunity to investors who have missed the rally before. We suggest accumulating gold in the Rs.45500-46000 zone for upside target towards Rs.47500 from a month perspective.

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