Did the Bullish Steam in Gold and Silver Exhaust Itself?

After a continuous winning streak in the international and local market, it seems that Gold has begun to witness a correction.

The price of Gold had shot up as investors flocked to safe havens for their wealth, a move triggered by the growing Coronavirus pandemic worldwide and growing tensions between powerful countries of the world.

Many analysts believed that gold had a significant correction overdue, and it now seems as if they were right.

In the international market, Gold kicked off its downward trajectory after a failed attempt at a new record high on Monday. Gold and silver posted strong losses Tuesday. Trading led gold down over $115 in a single day. Both gold and silver prices seemed to plummet as if in a freefall.

This can be explained either as profit-taking of the early investors who rode the trend before it was clearly pronounced, or as the loss of steam of investors bullish on gold. Sentiment towards gold had previously become positive in the extreme, with only a minority of participants sounding a note of caution.

The change in investor sentiment is also reflected in the Nepalese market. In the price updated by the Federation of Nepal Gold and Silver Dealers' Association today, gold fell a massive Rs. 6,200 compared to yesterday.

Fine gold will trade at Rs. 95,400 per tola today while Tejabi gold will trade at Rs. 94,900 per tola. Just yesterday, gold was trading over the 1 lakh ceiling per tola, with fine gold trading at Rs. 1,01,600 per tola.

The blow is also witnessed in silver. While it was trading at Rs. 1435 per tola yesterday, silver has also fallen to Rs. 1210 per tola today.

This fall can also be attributed to Russia claiming to register the first vaccine against the global pandemic that has taken over 740,000 deaths worldwide. Gold had witnessed an aggressive bullish rally mainly because of the Coronavirus that had shaken major economies of the world. Now that the virus can be warded away, there is no longer a reason to stick to precious metals as a safe haven for wealth anymore.

Nevertheless, some analysts still believe that the price of gold and silver is destined to create another bullish rally after this short-term profit-taking is over.