Buy Gold on dips to USD 1700; target USD 1720: Geojit

Spot gold regained strength, surging more than one percent yesterday propped up by Middle East tensions and hopes of US solution to its fiscal problems. Tensions between Israel and Palestine have buoyed the safe haven appeal of gold. Market confidence has improved after the US lawmakers suggested that the Congress could reach a deal on financial crisis by early 2013. Positive economic releases from the US lifted the market confidence. US home sales figures improved and homebuilder sentiment in November rose to a six year peak levels. The Euro softened subsequent to the Rating agency Moody’s Investors Services stripped France of its top government bond rating while the dollar gained slightly. However, market onlookers will be closely watching the outcome of today’s Euro-area finance minister’s meet in Brussels. The ministers will discuss the disbursement of 44 billion Euros emergency loans to Greece, reduce debt and provide two extra years of external financial help to the country.

After taking support from $1700, prices seems to be getting back on bullish track but requires breaking the 50 day moving average resistance of $1742 convincingly. For the day, early upsides are expected to attract corrective selling from $1738-42 regions but possibly burst the same in the immediate run. $1755/1776 followed by $1795 will be the immediate upside objectives once it successfully surpasses $1742. A slip again below $1700 would reset the bearish move in motion and should ideally be held at the recent swing support of $1672. A fall past the same would be a deep and fatal plunge that could extend as far as $1648/1600 but such falls are not favoured at this point. The 100 and 200 days moving averages possibly halts major selling in a long run. Trading volumes have been contracting for the last few days while the RSI is placed in neutral zone.

Trading strategies:

Key levels for the day: Upside Immediate: 1738-42 region followed by 1755/1776/1795 then 1800
Downside immediate: 1700/1662-1665 regions followed by 1648/1625/1590.
Buy above 1742 target 1775 SL below 1621. Buy on dips to 1700 target 1720 SL 1688
Buy above 1775 target 1800 SL below 1758.
Sell near 1742 target 1713 SL above 1758. Sell below 1700 targets 1675 SL 1718.
Sell below 1665 target 1642 SL above 1682
Initial rallies are favoured towards 1738-42 regions and possibly consolidate. A mild corrective selling is anticipated but unlikely for major liquidation pressure.
MCX Dec: Intraday Levels are: Resistance: 31750/31930/32100 Support: 31600/31350/31180

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