We believe MCX Gold Oct contract may trade in a range between Rs 38,100 to Rs 37,100 in the coming week due to absence of any relevant economic data.
Gold prices have generated huge returns rising 18 percent since the start of the year. A large part of this gain came during the last four months starting June, with Gold hitting high of $1,566 per troy ounce.
Since then, Gold prices have struggled at higher levels after a hawkish speech from a usually dovish voting member Fed Charles Evans and Fed Clarida along with a stronger Dollar.
The next trade meeting between US and China has been slated for October 10 in Washington. The forthcoming meet is of particular importance as US President Donald Trump recently hinted that a deal between the two economies may happen sooner rather than later. Even a partial deal would be negative for the Gold prices.
Another factor that has taken the sheen off the yellow metal is the consolidation of US Dollar against Pound and Euro pushing dollar-priced commodities lower.
From the fundamental mid-term perspective, Gold prices are still supportive as the ETF holding in the world's largest Gold traded exchange fund, SPDR Gold Trust, has risen enormously by 24 percent in 2019. The global central banks continue showing interest in buying Gold this year.
The new development, Trump impeachment inquiry could add to the increasing geopolitical concerns. The UK Prime Minister Boris Johnson is also in a race to cut a compromise deal with the EU and October 31 is an important date to be kept in mind.
Gold prices have been under selling pressure from a strengthening Dollar. But dips should be limited as we approach the Diwali season in India. August Gold imports have remained poor, signalling a rise in demand in the coming months.
We believe MCX Gold Oct contract may trade in a range between Rs 38,100 to Rs 37,100 in the coming week due to absence of any relevant economic data and also because the Chinese markets remain shut from October 1 to October 8 on account of National Day.
(The author is Commodity Analyst at Narnolia Financial Advisors Ltd.)Disclaimer: The views and investment tips expressed by investment expert on moneycontrol.com are his own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.The Great Diwali Discount!
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