Gold futures on Multi Commodity Exchange (MCX) were up 1.10% or Rs 549 at Rs 50,297 per 10 gm while Silver futures rose 2.11% or Rs 1,276 to Rs 62,130 per kg. Indian government officials have also indicated a stimulus may be in the offering.
Analysts believe that investors can avoid going short but look to buy the dip in precious metals and that the yellow metal should be able to hold on to its crucial support around 50,000 per 10 gm.
"Gold needs to be in everyone's portfolio for diversification of risk. The fall in prices offers an opportunity to buy ahead of Diwali," Sanjiv Bhasin, IIFL Securities, told ABP News.
Navneet Damani, VP – Commodities Research, Motilal Oswal Financial Services, believes that Gold could be in the range of $1860- 1915, and on the domestic front, prices could hover in the range of Rs 49,600-50,900.
"Gold slumped more than 5% in the previous session as news of the first successful late-stage COVID-19 vaccine trials prompted investors to dump safe-haven bullion and flock to riskier assets. Pfizer and German partner BioNTech SE, the first drugmakers to show successful data from a large-scale clinical trial of a vaccine, said they expect to seek US emergency use authorization for the drug later this month. The vaccine news was so sudden, and out of the blue that there was no time to think and a quick reaction was seen in all asset classes, equities and yield surged whereas bullion's slipped," said Mr. Damani.
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Apart from the vaccine news, Gold has some support amidst the Covid-19 relief bill's hopes under Joe Biden's leadership, continuous rise in Covid cases globally, and post US elections updates as President Trump knocking court's door at various states to prove that Joe Biden's victory is not real.
"Economic data is muted on the US front, although market participants will keep an eye on the unemployment rate expected from the EU," Mr. Damani added.
Kumar Jain, President –Mumbai at India Bullion Jewelers Association, believes that gold prices will touch Rs 55,000 per 10 gm by Diwali.
"The Pfizer news yesterday on the COVID-19 vaccine led to a sharp fall in gold prices. But when people realized that the vaccine needs to be stored and distributed at minus 70 degrees Celsius – a big challenge for India and other developing countries with under-developed cold chain infrastructure, people started buying Gold," Mr. Jain told ABP News.