Gold prices inched up on Thursday but hovered near a seven-week low constrained by a strong dollar and expectations of the US Federal Reserve winding down stimulus measures soon.
On the Multi-Commodity Exchange (MCX), October gold contracts were trading higher by 0.12 percent at Rs 45,910 for 10 grams at 0919 hours. September silver futures were up by 0.14 percent at Rs 60,551 a kilogram.
Gold prices rose Rs 281 to Rs 46,238 per 10 gram on September 29 snapping a five-day losing streak on positive global cues, rupee depreciation and weakness in the equity market amid risk aversion. However, the upside in the yellow metal was capped by strength in the dollar index surging to 11-month high.
Gold and silver prices crashed again on Wednesday amid strong gains in the dollar index. Both the precious metals settled on a weaker note in the international markets. We expect both the precious metals to remain volatile in today’s session ahead of the US GDP data, volatility in the dollar index and voting on US infrastructure spending bill, said Manoj Kumar Jain, Director, Head-Commodity & Currency Research, Prithvifinmart Commodity Research.
"Gold prices are expected to hold $1700 per troy ounce levels. Gold has support at $1712-1700 per troy ounce and resistance at $1734-1750 per troy ounce while silver has support at $21.20-21.00 per troy ounce and resistance at $21.84-22.10 per troy ounce. At MCX, gold has support at 45550-45400 and resistance at 45920-46100 while silver has support at 58000-57500 and resistance at 58800-59400 levels. We suggest buying silver around 58100 with a stop loss of 57700 for the target of 59000.
Trading Strategy
Ravindra Rao, CMT, EPAT, VP- Head Commodity Research at Kotak Securities
COMEX gold trades marginally higher near $1732/oz after a 0.8% decline yesterday when it tested 7-week low. Gold inched up today as the US dollar index paused after its recent rally to 1-year high. Also supporting price is mixed economic data, concerns about China, rising inflation pressure and US debt ceiling debate. However, weighing on price is continuing ETF outflows which show weaker investor interest. Also weighing on price is increasing expectation of Fed’s monetary tightening. Gold is witnessing some relief rally however it may not sustain as Fed's monetary tightening expectations may keep US dollar supported.
Sandeep Matta, Founder, TRADEIT Investment Advisor
The precious metal has lost almost $100 in September month and enhancing possibilities to breach $1700/oz by making daily new lows. The combination of higher treasury yields, strong dollar, inflation fear and risk off sentiments in the marketplace are the key reason for underperformance in the gold.
Gold on MCX is also in the grip of bears and trading below the key phycological level of Rs 46000. The outlook is negative however we may see some speculative buying interest after this sell-off and expected roll overs due to nearing monthly expiry.
Key level for gold August contract – 45692
Buy zone above – 45700 for the target of 45900-46100
Sell zone below – 45650 for the target of 45500-45425
Amit khare, AVP- Research Commodities, Ganganagar Commodity
Gold prices are lower and hit a six-week low in midday US trading Wednesday, as modest early gains were erased when the US dollar index rallied to an 11-month high. December gold futures bears have the firm overall near-term technical advantage. A three-week-old price downtrend is in place on the daily bar chart. Bulls’ next upside price objective is to produce a close above solid resistance at this week’s high of $1,760.90. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $1,700.00. First resistance is seen at today’s high of $1,746.00 and then at $1,750.00. First support is seen at $1,715.00 and then at $1,700.00.
Both the metals are trading at oversold zone since last 3-4 trading sessions. Momentum indicator RSI also indicating the same and creating a strong positive divergence in 4-hourly as well as daily chart, which means any time we can see a good short covering rally in both metals, So traders are advised to create fresh long positions in gold and silver near support, traders should focus important technical levels
December Gold closing price 45769, Support 1 - 45500, Support 2 - 45250, Resistance 1 - 46030, Resistance 2 - 46260.
December Silver closing price 58386, Support 1 - 57700, Support 2 - 57000, Resistance 1 - 59750, Resistance 2 - 61000.
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