Gold has been marching northwards for the last three successive months, tracking a decline in the dollar index, softening of the bond yields and the expectations of a less aggressive stance from the US Fed amid the recession fear. Besides, the expectation of improvement in demand outlook with the reopening of China and buying by central banks further boosted the sentiment.
In continuation of the prevailing trend, Gold made a promising start to February month, tracking the announcement of a hike in customs duty articles made from gold and silver bars in the Union budget. Besides, the dovish tone of the US Fed on policy rates further boosted sentiment. Two other major central banks, the European Central Bank and the Bank of England, also announced a rate hike by half a percentage point and it was largely in line with the market expectation. With all the major events and positive cues behind us, we are seeing profit taking at the higher levels.
Going ahead, data like the US non-farm payrolls and initial jobless claims will be in focus for cues. We could see some breather in the prices after the phenomenal surge. Besides, the indication of marginal recovery in the dollar index, which holds a negative correlation with gold prices, is adding to the possibility of profit taking in the coming week.
On the international front, we’re eyeing the $1880-$1900 zone to act as a support in case of a dip while the upside seems capped to the $1950-$1980 zone. We could see a similar trend on the domestic front as well wherein the Rs 56200-56600 zone should restrict the decline while any rebound toward the Rs 58100-58700 zone may attract selling.
Amid all, participants should look for buying opportunities around the key support areas as the overall positive trend is not going to fade away anytime soon.
The author is VP- Technical Research, Religare Broking
Disclaimer: The views and investment tips expressed by experts on Moneycontrol are their own and not those of the website or its management. Moneycontrol advises users to check with certified experts before taking any investment decisions.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
