Buy Gold above USD 1682; target USD 1720: Geojit

Gold put a strong performance yesterday, shot up above $1660 an ounce, the first time since early May. Euro lifted to a seven week high while dollar hit a two month low against a basket of currencies after the latest US FOMC meeting minutes raised concerns of a fresh monetary easing.  Policy members in the US FOMC meeting said additional stimulus measures would be required soon if the economy is not showing signs of hard-wearing recovery. Economic stimulus from central banks probably raises inflation outlook which could benefit gold due to its inflation hedge appeal. Possibilities of more monetary easing form central banks attracted more speculators into the counter. However, holdings of SPDR, the world’s top gold backed exchange traded fund, continued to rise testing a three month high yesterday. Physical buying is slightly picking up from India after reports of good monsoon that attracted more rural buyers and demand owing to upcoming marriage season regardless of record domestic prices. Meanwhile, investors will closely watch the result of Greek Prime Minister and European leaders’ meeting later this week and also the outcome of central bank symposium in Jackson Hole at the end of this month for more clues on bullion direction.

Following a burst above the previously discussed 200 day moving average resistance of $1643, prices drifted higher and are now clinging just below $1665. Currently, prices are convincingly trading well above the moving average support of 1643 signaling room for further up ticks. Though the day’s bias remains positive, a breach of $1680 could rejuvenate further strong short covering rallies towards $1720 which we favour in the coming sessions.  Oversold conditions in RSI and Bollinger bands indicate possibilities of a corrective selling but chances of such attempts are unlikely to surpass below $1640. Hence, for the day, dips to $1650-45 would be ideal levels for entering longs for a short term. Alternatively, unexpected sell off, if materialized below $1640, would be a bearish call and see a vertical drop towards $1617/1600 or more. Volumes are seen almost steady while the MACD witnessed a positive crossover.

Trading strategies

Key levels for the day: Upside: 1665/1680 followed by 1720. Short term 1762

Downside immediate: 1645/1618/1600-1596 regions and then 1582.

Buy on dips to 1643 target 1662/1680 SL below 1628. Buy above 1682 target 1720 SL below 1660

Buy on dips to 1617 target 1643 SL below 1605. Buy on dips to 1588 target 1612 SL below 1580.

Sell if unable to clear above 1682, target 1632 SL above 1700. Sell below 1632 target 1606 SL above 1645

Sell below 1578 target 1562 SL above 1596. Sell below 1560 target 1534 SL 1584.

Initial moves are likely to take prices to 1665-80 levels followed by a consolidation but probably break the same later. 

MCX Aug: Intraday Levels are: Resistance at 30900/31000 then 31600. Supports: 30350/30120/29990/29850-29700/29530 then 29420

Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.