Buy MCX Gold Feb; target of Rs 29400: Fortune Financial

Fortune Financial Services has come out with its report on bullion. According to the research firm, one can buy MCX Gold February at Rs 28990-28900 with a stop loss below Rs 28700 for the target price of Rs 29400 & Rs 29640.

January 13, 2014 / 18:09 IST

Fortune Financial Services report on gold

Gold advanced to the highest level in almost three weeks on speculation that its biggest annual decline since 1981 is spurring increased demand in Asia. Gold rallied last week by the most since October on signs of stronger demand in China, which probably overtook India as the largest user last year. Gold sales are expected to pick up at the end of January, as China's Lunar New Year usually ushers in strong demand for the metal. Some of the upside action was reported to have been the result of fresh fund allocation to undervalued or oversold commodities like gold.

It is possible that the sharp declines on Tuesday pulled in fresh bargain hunting by Indian and Chinese players, who are reportedly interested in holding physical gold over gold derivative type holdings. The domestic bullion markets are expected to continue their bull-run in the week ahead due to robust physical demand following the recent slump in prices. Bullion markets are seen rallying in the week ahead, buoyed by firm physical demand, especially from the major consuming nation China.

Bullion slumped 28 percent last year as central banks' money-printing failed to stoke inflation and the global economy strengthened. Data today may show U.S. services and factory orders climbed, supporting the Federal Reserve's Dec. 18 decision to reduce its monthly bond buying to USD75 billion from USD85 billion this month.

MCX Gold Feb Contract is getting support from lower levels, as momentum buying is happening from lower levels. Traders are advised to buy on small dips , immediate resistance is seen near 29642, if market hold and trade above this level then further upside move is possible till 30648 and 31460 levels. Market may find strong support near 28900 ranges; if market closes below this level then bearish trend will be back to market and more down side is possible till 28700, 28400 and 28200.