Outlook on Gold: Geojit Comtarde

Gold’s moves were almost silent and the session ended almost unchanged at $1637 an ounce yesterday. Rising worries over upholding austerity measures in the Euro zone by the newly elected governments of France and Greece weighed on both the Euro and spot gold too. Euro ended lower against dollar extending its previous session's losses. However potential demand from India, the world’s top consumer of gold, and China may offer some support. Yesterday, Government of India has decided to withdraw the proposal of imposing an excise duty on gold jewellery forced in March. In addition to this, Hong Kong’s shipments of gold to China have posted a rise of 59 percent in March. However, investors will closely watch the outcome of the key US data like Trade balance, CPI and Michigan Confidence in the coming days to get fresh cues on bullion’s direction.

Moves in the previous session were halted near the trend line support of $1630 and seem to be consolidating. Since the start of April, prices have been congested inside 1680-1610 levels and any of the side breakouts will put an extra pressure on prices. Prevailing candlestick formation suggests a healthy liquidation, but $1630 needs to be cleared later in the session. At the same time, if 1630 is undisturbed, then recovery rallies may be seen and such moves could extend towards 1672, but unlikely for major short covering. RSI and Bollinger Bands show an over sold situation but probable negative crossover in the MACD is likely to re-ignite weak sentiments in the short term.

Trading strategies:

• Key levels for the day: Downside: Immediate 1625 then 1620- 1609 regions followed by 1580/1545
• Upside: Immediate 1655/1672/1684 strong 1696-1702 then 1740.
• Sell below 1625 target 1610 SL above 1638.
• Sell below1609 target 1580 SL above 1628.
• Sell on pullbacks to 1668 target 1648 SL 1684. Sell on pullbacks to 1682 target 1648 SL above 1696
• Buy dips to 1610 target 1638 SL below 1598. Buy above 1648 target 1660 SL below 1632
• Buy above 1684 target 1696 SL 1671. Buy above 1703 target 1724/1755 SL 1680.
• Expect an initial pullback followed by a consolidation and may call for strong liquidation.