Gold Price Today: Yellow metal may show limited upside, investors can create fresh long positions on dips

Gold prices eased after rallying to a one-week high above the key $1,750 level in the previous session as the dollar rebounded and made the metal expensive for holders of other currencies.

October gold contracts were little changed at Rs 46,326 for 10 grams on the Multi-Commodity Exchange (MCX) at 0919 hours on October 1. September silver futures fell 0.21 percent to Rs 59,489 a kilogram.

Gold prices declined Rs 387 to Rs 45,851 per 10 gram on September 30 on a stronger dollar and subdued global cues but the downside was capped by rupee weakness. The yellow metal traded in a tight range on expectations that the US Federal Reserve could soon begin winding down its bond-purchase programme.

Gold prices rose 2 percent on the MCX after Fed chair Jerome Powell said inflation could run into next year.

The US 10-year bond yield and the Dollar index eased on September 30. The ongoing power shortage and real estate crisis in China are putting pressure on the global equity market.

Gold faces resistance at Rs 47,000, while it has support at Rs 46,300. The upside in gold prices may remain limited although a bounce in prices from support levels is expected today, said Abhishek Chauhan, head of commodity & currency at Swastika Investmart.

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Trading Strategy

Sandeep Matta, Founder, TRADEIT Investment Advisor

The precious metal has witnessed sharp short-covering and bargain hunters stepped in to buy after the Federal Reserve chairman said the US is still far from full employment. A falling equity market and a depreciating dollar may help gold prices to gain further from here. However, the trend is still sell on rise and long-term positions should be avoided.

Key level for gold August contract – 46,312
Buy zone above – 46,325 for target of 46,700-47,000
Sell zone below – 46,300 for target of 46,100-45,900

Ravi Singh, Vice President & Head of Research, ShareIndia

Gold closed on a positive note, witnessing some relief rally due to short-covering or profit-booking. However, the expectation of stimulus tightening by the US Fed will keep a check on fresh buying.

Buy zone above – 46,600 for target of 47,100
Sell zone below – 46,200 for target of 45,800

Amit Khare, AVP - Research Commodities, Ganganagar Commodity

Technically, December gold futures bears still have the overall near-term technical advantage. A four-week-old price downtrend is still in place on the daily bar chart. Bulls’ next upside price objective is to produce a close above solid resistance at $1,788.40. Bears’ next near-term downside price objective is pushing futures below solid technical support at $1,700. First resistance is seen at $1,765.00 and then at $1,775.00. First support is seen at $1,750.00 and then at $1,740.

Both metals traded in the oversold zone over the past 4-5 sessions. The relative strength index, a momentum indicator, also shows the same and is creating a strong positive divergence in 4-hourly as well as daily charts, so traders are advised to create fresh long positions in gold and silver on small dips near support. Traders should focus on important technical levels.

December gold closing price 46,521, support 1 – 46,200, support 2 – 45,950, resistance 1 – 46,800, resistance 2 – 47,100

December silver closing price 59,617, support 1 – 59,100, support 2 – 58,700, resistance 1 – 60,100, resistance 2 – 60,600

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