Gold rises to Rs 47,545, but weak dollar, inflation woes weigh

Gold prices inched up on October 21, extending gains into a third session, as a softer dollar made the metal cheaper for buyers holding other currencies.

On the Multi-Commodity Exchange (MCX), gold contracts were up 0.10 percent to Rs 47,545 for 10 grams at 9.23 am. December silver futures were up 0.43 percent to Rs 65,890 a kilogram.

Gold prices rose by Rs 164 to Rs 47,548 per 10 gram on October 20, tracking firm global trends and festive demands. The precious metal upside was capped by a sharp appreciation in the rupee, a stronger dollar and rising US Treasury yields.

The physical demand for gold ahead of the festive session supports gold and silver. Gold is likely to test $1,800 and above this level, it is likely to move towards $1,835. It has support at $1,760. In MCX, the gold prices may test Rs 47,800 levels. Above this level, an increase in buying momentum is expected. The yellow metal has support at Rs 47,100, said Abhishek Chauhan, Head of Commodity and Currency, at Swastika Investmart.

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Trading Strategy

Manoj Kumar Jain of Prithvifinmart Commodity Research

Gold and silver extended gains on Wednesday amid a weakness in the dollar index. Both the precious metals settled on a positive note in the international markets. Gold December futures contract settled at Rs 47,499 per 10 gram with a gain of 0.46 percent and the silver December futures contract settled at Rs 65,607 per kilogram with a gain of 1.80 percent.

"Weakness in the dollar index and global inflation concerns are pushing gold and silver prices up in the international markets. We expect both the precious metals to remain volatile in today’s session ahead of the US unemployment claims data. Gold prices could test the $1,800-per-troy-ounce level once again in the international markets. Gold has support at $1,772-1,758 per troy ounce and resistance at $1,800-1,812 per troy ounce, while silver has support at $24.40-24.10 per troy ounce and resistance at $24.94-25.20 per troy ounce," he said.

"At MCX, gold has support at Rs 47,240-47,055 and resistance at Rs 47,660-47,850, while silver has support at Rs 65,220-64,700 and resistance at Rs 66,100-66,660 levels. We suggest buying gold around Rs 47,350 with a stop loss of Rs 47,180 for target of Rs 47,770," Jain added.

Ravi Singh, Vice President & Head of Research, ShareIndia

Gold MCX looks stronger day by day on the charts. As the Indian festive season and the marriage season started, we may see stable buying in gold and silver. Fed Governor Christopher Waller quoted that that if inflation keeps rising at its current pace in the next few months, Fed policymakers may need to adopt "a more aggressive policy response" next year. We advise traders to create the fresh long positions in gold and silver on dips.

Buy zone - Rs 47,400 for the target of Rs 47,650
Sell zone below - Rs 472,00 for the target of Rs 47,000

Amit Khare, AVP- Research Commodities, Ganganagar Commodity

Gold and silver prices were higher near midday on October 20. Concerns about rising inflation are prompting buying interest in the hard asset metals. Also, the technical postures for both the precious metals have turned more bullish recently. December gold futures were last up $13.80 at $1,784.20. December Comex silver was last up $0.202 at $24.10 an ounce.

Yesterday, we saw some safe-haven buying in bullions at lower levels, especially in silver, Overall, technical charts of gold and silver are strong, momentum indicator RSI is also indicating the same. Traders are advised to make fresh long positions in gold and silver on small dips near given support levels, traders should focus important technical levels.

December Gold closing price Rs 47,499, Support 1 - Rs 47,300, Support 2 - Rs 47,000, Resistance 1 - Rs 47,675, Resistance 2 - Rs 47,900.

December Silver closing price Rs 65,607, Support 1 - Rs 65,200, Support 2 - Rs 64,800, Resistance 1 - Rs 66,000, Resistance 2 - Rs 66,600.

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