In December gold futures, per 10 grams Rs. 2,200 (2%) surged to Rs. 1,23,255 reached the day’s peak. Gold on the COMEX was also about 2% higher at around $4,086.90 a troy ounce around this time, up $77.10.
With the shutdown for 40 days, it has entered a record period, raising concerns about the broader US economic outlook.
Decoding the recent weak trends, research analyst Jatin Trivedi, vice-president, LKP Securities, said positive developments in US-China trade continued to fuel optimism in gold prices. Easing global risk concerns have taken the shine off the yellow metal’s haven appeal, he said.
But dovish signals from the Fed and continued tariff-related uncertainty keep safe-haven demand intact, and any signs of a US growth slowdown or weak inflation data could prolong gold’s rebound, he opined.
US CPI and Core CPI numbers will be released this week, which could have an impact on gold. “The impression of softer inflation in the US could increase expectations of further rate cuts, providing near-term support for bullion,” Trivedi said.
Among domestic factors, India’s CPI and WPI readings are pending. Meanwhile, the rupee remains weak on trade imbalance concerns and continued foreign fund inflows, cushioning MCX gold even as COMEX prices consolidate, LKP analysts said.
He sees the current trade as a ‘buy on dips’ opportunity for traders. He lists 5 technical triggers to support his point:
1) Key support and resistance
Gold prices for the last few sessions have been Rs. 1,20,000 – Rs. 1,22,200 are consolidating in a tight range, reflecting indecision after the recent correction. Key resistance levels at Rs. 1,22,200 and Rs. 1,23,650, while the strong support zone is Rs. 1,20,100 – Rs. 1,19,350 is at. Rs. 1,22,200 above a critical break of Rs. 1,23,600 – Rs. 1,25,000 could open upside momentum, while Rs. A drop below 1,20,000 could restart the selling pressure.
2) RSI
The RSI is currently around 51.7, indicating a neutral to mild positive bias. The indicator holds just above the 50 mark, indicating that purchasing power is slowly improving but not yet in a strong momentum phase. A sustained move above 55 would confirm bullish control.
3) Bollinger Bands
The band narrows, indicating volatility compression. Prices are moving closer to the midline indicating possible breakout conditions. A close above the upper band (Rs. 1,22,200 – Rs. 1,22,500) could lead to fresh bullish momentum, while Rs. The lower band near 1,20,000 acts as immediate support.
4) Moving Average
Price action is showing consolidation near short-term moving averages. EMA 8 (Rs. 1,21,000) is trying to cross EMA 21 (Rs. 1,21,100), which, if confirmed, may signal a reversal of the initial trend. Sustaining above both EMAs will strengthen the buy-on-dip strategy.
5 MACD
The MACD histogram is flattening, with the MACD line approaching a potential crossover above the signal line. This indicates a loss of momentum in the previous downtrend and suggests a base-building phase for the next rebound.
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Gold Trading Strategy: Buy on Dips
Trivedi said, the gold structure remains mildly bullish, if Rs. 1,22,200 is likely to give way to a breakout above near-term consolidation if sustained.
Entry Range: Rs. 1,20,800 – Rs. 1,21,000
Stop Loss: Rs. 1,19,500 (closing basis)
Target: Rs. 1,22,500/ Rs. 1,23,600
(Disclaimer: Recommendations, suggestions, opinions and views given by experts are their own. These do not represent the views of Economic Times.)
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