Gold prices might initially rise during current week: Karvy

Karvy Commodities' report on bullion

Gold prices traded in a ranged manner for larger part of session. While Spot market prices remained stable even during the US session, we saw that huge mercurial trade in the futures markets. Overall we maintain our moderate bullish bias into the commodity in the short-term with the prices taking further support out of the mixed to weaker US and European equity indices globally.

In the Indian context, we have seen heavy movement as per as the calendar spread market is concerned yesterday. The spread between the February and April month contract suddenly slipped to near Rs 575 from over Rs 700 per 10/Gms last week. We had earlier recommend buying the spread and booked partial profits near Rs 750 levels. With the speculation in local markets increasing regarding tax ease by the GoI and also rising April month futures over near month has led towards reduction in backwardation. We advice traders to close the open positions in the spread near cost, if any. Our buying level was around Rs 450-500. Overall, we have a bullish view into the commodity for small targets in Intra-day.

Weekly Outlook: Overall, we feel gold prices might initially rise during current week while prices might decline from the higher levels. At the local market, Rs 29,371 continues to be a strong resistance and unless that is cleared, we shall not turn completely bullish on gold. Therefore we insist our traders take Weekly positions on gold for mini-trades rather than mega lots in both the direction of trade. MCX February Call: Buy at 28720-28750 TP 29250 SL 28480 & Sell at 29300-29350 TP 28840/28650 SL 29700

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