Gold prices rose sharply above the Rs 51,500 level on September 18 and experts say if the momentum continues, the metal could retest Rs 51,600-51,800.
On the Multi-Commodity Exchange (MCX), October gold contracts were trading higher by 0.23 percent at Rs 51,572 per 10 gram at 0920 hours. September silver futures were trading 0.28 percent higher at Rs 68,330 per kg.
Both the Sensex and the Nifty50 showed weakness after the US Federal Reserve meeting.
Gold slipped 1.05 percent and settled at $1,949.90 per troy ounce and silver slipped 1.38 percent to end at $27.10 per troy ounce at the Comex division.
Domestic markets also ended weaker. Gold futures contract settled at Rs 51,453 with a loss of 0.72 percent and the silver futures contract settled at Rs 68,142 with a loss of 0.93 percent.
The dollar index gained after the US Federal Reserve revised upwards the economic growth outlook and kept interest rates soft for a longer period. The US unemployment claims also declined to 8,60,000 against the previous data of 8,84,000 but joblessness is still at very higher levels.
“We expect both the precious metals could show some rebound in today's session. Gold prices can test $1,966-1,974 per troy ounce again, $1940-1933 will act as a major support in today's session,” Manoj Jain, Director (Head-Commodity & Currency Research) at Prithvi Finmart told Moneycontrol.
On MCX, if gold sustains above Rs 51,440, it can test 51,660-51,800 levels again, while 51,220-51,100 levels are likely to act as major support.
If silver sustains above Rs 68,200, it can test Rs 68,800-69,200 levels again on the upside, and on the downside 67,500-67,000 are likely to act as major support for the day. "We suggest buying a dip in both the precious metals in today's session," he said.
Trading Strategy
Expert: Sriram Iyer, Senior Research Analyst at Reliance Securities
On September 17, international bullion prices fell amid a lack of clarity from the US Federal Reserve on the stimulus front.
Meanwhile, new US jobless claims remained perched at higher levels last week, suggesting stalling labour market recovery and a capped downside.
Technically, MCX October gold is struggling near its 21-day moving average which is placed at 51,400 below which it will continue downside momentum up to 51,200-50,900 levels. Resistance holds at 51,600-51,750.
MCX Silver December contract closed below Rs 69,000, where some downside pressure will continue if it sustains below 69,000 level in the coming sessions. However, below 68,500, it will continue its sideways to marginal downside momentum up to 67,300-66,000.
Strategy for gold: Sell October gold at Rs 51,500 with a stop loss at 51,600 and target at 51,200.
Strategy for silver: Sell December silver at Rs 68,000 with a stoploss at 68,700 and target at 66,900.
Ravindra Rao, VP- Head Commodity Research at Kotak Securities.
Comex gold was trading moderately higher near $1,958 after a 1.1 percent decline the previous day. Gold edged up on the back of a weaker dollar, disappointing US economic data, loose monetary policy stance of major central banks and uncertainty about US fiscal stimulus.
ETF outflows, however, show weaker investor demand. Gold may remain directionless amid choppiness in the equities and the dollar, however, the dovish stance of major central banks may support the prices.
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.
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