Buy Spot Gold on dips: Geojit Comtrade

Spot gold held firm near $1770 an ounce, buoyed by a strong dollar following actions taken by various central banks to urge growth in their economies. In an unexpected move, Bank of Japan increased the size of their asset prices to tackle slowing down of domestic economy, which supported the dollar. However, investors are anticipating more monetary actions from China in the face of recent bleak economic releases. Manufacturing activity in China contracted in September, a straight 11th month fall but slightly at a milder pace than August. The recent economic developments pushed the dollar index higher from its multi-month lows while the Euro eased down. The US Fed’s third round of quantitative easing and the bond buying plan by European Central Bank raised global inflation outlook. Concerns over inflation probably support bullion due to its inflation hedge appeal. Physical demand from India is expected to pick up in the coming sessions amid the key festive Diwali and marriage season. At the same time, investment demand for gold has been strong for the last week with the ETF holdings lifting to its all time highs.
 
The corrective sell off  witnessed in the previous session has failed to clear the strong support of $1748. As long as prices stay above, the same could signal chances of continuation of the broad bullish momentum. On a broad basis $1800-1820 regions look to be possible but evolving such a rally aiming the target is expected to face immediate resistance again at $1780. Unexpected fall below $1748 could test $1732 /1710 levels but major falls are not anticipated unless on a close below $1680 with adequate volume. Anyhow, for the day, prices are expected to take an initial dips probably near $1752 followed by a consolidation and drift higher. Volumes seem strengthening while the oscillators are still placed well above the zero line. An overbought condition in RSI and Bollinger Bands are supportive for weak sentiments in a very short term.

Trading strategies for spot gold:

Buy on dips to USD 1748, target USD 1778, SL USD 1724

Buy on dips to USD 1720, target USD 1742, SL below USD 1700.

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.