Strength in the Dollar index and uncertainty over the stimulus support from the US Federal Reserves triggered heavy sell-off in both the precious metals
India Gold October Futures fell on September 28 following a muted trend seen in the international spot prices. Experts feel that the weakness is likely to continue for the precious metals, but Gold may find support near Rs 48,800-48,500 levels while resistance is seen near Rs 50,000 levels.
On the Multi-Commodity Exchange (MCX), October gold contracts were trading lower by 0.20 percent at Rs 49,560 per 10 gram at 0920 hours. December silver futures were trading 1 percent lower at Rs 59,027 per kg.
Gold and silver prices crashed last week amid gains in the US Dollar index and uncertainty on further stimulus support from the US Federal Reserve.
Gold prices plunged 4.78 percent at Comex division and settled at $1,864.15 per troy ounce while Silver also crashed and slipped 14.84 percent to settle at $22.97 per troy ounce at Comex division.
India Gold settled at Rs 49,659 per 10 gram with a weekly loss of nearly 4 percent and Silver settled at Rs 59,027 per one kilogram with a weekly loss of over 13 percent.
Strength in the Dollar index and uncertainty over further stimulus support from the US Federal Reserves triggered heavy sell-off in both the precious metals, suggest experts. The dollar index reached a two-months high and gained 1.74 percent last week and settled at 94.62 marks.
“Rising coronavirus cases across the world and fear of a second phase of lockdown in Europe also support the dollar and push other global currencies lower. On the other hand, US unemployment is still at 8,70,000 levels but housing sales have improved a lot and reached 14 years high due to lower interest rates,” Manoj Jain, Director (Head-Commodity & Currency Research) at Prithvi Finmart told Moneycontrol.
“We expect both the precious metals remain volatile this week and further strength in the dollar index could push prices lower. Gold is having strong resistance at $1,884-1900 per troy ounce and further selling is expected at higher levels. Gold could test its support levels of $1844-1818 per troy ounce levels again,” he said.
Jain is of the view that Gold is likely to face strong resistance at Rs 50,050-50,300 levels and selling is expected at higher levels again. Gold could test its support levels of 48,800-48,500 levels.
Expert: Sriram Iyer, Senior Research Analyst at Reliance Securities
International bullion fell on Friday as investors continued to have faith in the dollar from rising coronavirus cases and uncertainties over the next US stimulus to aid the economy.
The Republicans and Democrats are on the same page about the stimulus but they are not being able to decide the amount which is pushing investors towards the dollar.
Domestic gold and silver fell on Friday, tracking weak overseas prices. Domestic bullion could trade flat on Monday, tracking the international prices.
Technically, the MCX Gold October contract has bounced back from Rs 49,380 levels and gave a close above Rs 49,600 indicating some upside push up to Rs 49,900-50,200 levels.
MCX Silver December could continue to trade upside above Rs 56,000 levels where prices could bounce back up to Rs 59,900-60,800 levels. Support is at Rs 58,800-57,900 levels.
Ravindra Rao, VP- Head Commodity Research at Kotak Securities.
COMEX gold trades marginally lower near $1865/oz after a 0.6 percent decline in the previous session. Gold remains under pressure by recent gains in US dollar and mixed ETF flows which show weaker investor interest. Gold may remain rangebound unless there are fresh triggers however general bias may be on the downside until the US dollar comes off the highs.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.