Gold’s Recent Decline Creates New Hope For Bargain Hunters

A recent drop in Gold pushed the yellow metal towards the low 1700s, prices not seen for over 8 months. While many are still bullish on the precious metal, further losses could very much still be on the table.
New trend or correction in a very bullish market?
Gold, known as a safety linked asset during global uncertainty is once again becoming a favorite for different types of traders. The Covid pandemic has kept it on edge throughout last year, creating demand fueled by a decline in physical supply. This has carried on into 2021 and in order to support economies, many countries resorted to stimulus packages which meant Gold will continue to offer plenty of opportunities, at least in the near future.
In other words, fundamentals support higher prices yet the short term is seeing negative action, further fueled by an impulsive Dollar that recently rallied despite a very established and clear downtrend.
Wall Street Vs Main Street
In surveys done across the industry, market experts were rather bearish on Gold for the current week yet retail traders were focused on renewed upside. While Gold could play out in a number of different ways, volatility is present, likely to continue and should create plenty of irrationality as traders look to make sense and find clear new direction.
Gold’s road show
In India, consumers are dropping big amounts as Gold gets cheaper in a country that is big on holding the physical precious metal. Dealers are not enjoying the smooth inventory buildup they hope for given the limited supply and lack of full capacity production. Nonetheless, they continue to stock up in advance as prices could once again rebound sharply.
Singapore dealers noted firm demand with premiums being charged while China saw subdued activity given Covid-19 restrictions around the country. This was also the case for Hong Kong dealers who sold the metal on par or with a small premium while Japanese dealers charged half a Dollar extra for transactions.
For those of you looking for more insight, it’s worth noting that the $1700 area could see consolidation and could be key for what happens next. Traders are advised to remain vigilant as volatility dominates the trading hours of the major markets and occasionally, off market hours.
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