Gold prices are down Rs 11,000 from record highs. Safe to invest now?

Gold prices edged down in early trade on March 3 as firm US Treasury yields continued to put pressure on the yellow metal.

India Gold MCX April Futures were trading lower on March 3 tracking muted trend seen in the international spot prices as firm US Treasury yields continued to pressure the non-yielding bullion.

On MCX, April gold contracts were trading lower by 0.7% at Rs 45,187 for 10 grams in afternoon trade, while May silver futures were trading with 0.7% gains at Rs 67,809 a kilogram.

In fact, gold prices have been struggling near 10-month lows and are down over Rs 11,000 from its August 2020 highs of Rs 56,200 per 10 grams.

The metal has been hit by a stronger US dollar against a basket of some other major currencies and rising US Treasury yields.

A stronger dollar and Treasury yields typically have an inverse correlation with gold.

The fall in prices of gold and silver has left investors wondering whether they should invest in the precious metals or sell or hold what they have.

Experts believe increase in the pace of the vaccinations and the additional fiscal stimulus expected in the US may continue to weigh on gold prices.

Experts also said that lower levels are further expected to push demand for gold.

However, for the immediate short term, Anuj Gupta, Deputy Vice President, Commodity and Currency Research at Angel Broking said, “For today, traders can go for ‘buy’ in gold at Rs 45,300 levels with the stop-loss of Rs 45,000 levels for the target of Rs 46,000 levels. They can also go for ‘buy’ in silver at Rs 68,800 levels with the stop loss of Rs 68,000 levels for the target of Rs 70,400 levels.”