Gold price today: Yellow metal falls, deploy buy on dips towards Rs 49,600

Gold was trading lower on September 25, tracking a muted trend in the international spot prices on a strong dollar.

On the Multi-Commodity Exchange (MCX), October gold contracts were trading lower by 0.29 percent at Rs 49,758 per 10 gram at 0920 hours. December silver futures were trading 0.7 percent lower at Rs 59,165 per kg.

The dollar index is up 1.5 percent for the week, its best since early April. A firmer dollar makes bullion more expensive for holders of other currencies, said a Reuters report. Spot gold fell to $1,864.47 per ounce. Prices are down 4.4 percent, so far, in the week.

On September 24, gold and silver showed extreme volatility and experts are of the view that investors could deploy the buy-on-dips strategy towards Rs 49,600 for a target of Rs 49,950.

Both the precious metals opened gap down on September 24 and tested fresh lows in early trade but downbeat US unemployment claims data saw them recover from their lows.

Gold settled at $1876.90 per troy ounce with a gain of 0.46 percent and silver at $23.19 per troy ounce with a gain of 0.39 percent. Weakness in the rupee saw the domestic market settled on a positive note.

October gold futures contract settled at Rs 49,904 per 10 gram with a gain of 0.80 percent and the December silver contract settled at Rs 59,629 per one kilogram with a gain of 1.95 percent.

“The dollar index is still trading at two months high and uncertainty over further stimulus from US Federal Reserve could push pressure on both the precious metals at higher levels,” Manoj Jain, Director (Head-Commodity & Currency Research) at Prithvi Finmart told Moneycontrol.

“Gold only sustain above $1,884 per troy ounce /Rs 50,330 could show further strength else it will test it's support level of $1,855-1,840 per troy ounce / INR 49660-49500 levels again,” he said.

Jain is of the view that silver is likely to face a strong resistance near Rs 60,600 and if it sustains above the level, then further strength could be seen while the support is placed at Rs 58,500-57,800.

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Trading Strategy

Expert: Sriram Iyer, Senior Research Analyst at Reliance Securities

International bullion rebounded on September 24 and snapped a three-day fall to end the session marginally higher as the dollar gave up gains. Markets also saw some covering of shorts after three days of big correction.

Technically, MCX October gold closed on a positive note for the first time since past days. It has bounced back from Rs 49,250 and gave a close above Rs 49,600, indicating some upside push up to 49,900-50,200 levels.

MCX December silver bounced back from Rs 56,000 levels and closed on a positive bias above Rs 59,500, indicating a bounce-back momentum of up to 59,900-60,500 levels. Support is at 59,000-57,500.

Strategy for gold: Buy October gold at 49,600  with a stoploss at Rs 49,450 and target at 49,950.

Strategy for silver: Buy December silver in 59,100-59,200 range with stop loss at 58,600 and target 60,200.

Disclaimer: The views and investment tips expressed by experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.