Gold traded in the red on Wednesday despite weakness in the dollar index (DXY) which hovered around 104.67 against a basket of top six currencies as the Street remained cautious ahead of the US Federal Reserve’s Federal Open Market Committee Meeting (FOMC) which begins on September 19, to take cues of the road ahead.
The movement is also expected to remain range bound with US CPI data due to be released later today.
The MCX October gold futures were trading down by Rs 91 or 0.16% from the Tuesday closing price at Rs 58,535 per 10 gram on the MCX while the December Silver futures were trading at Rs 71,497 per kg, higher by Rs 437 or 0.61%.
On Comex, Gold futures were trading at $1,932.80 per troy ounce on Wednesday, down by $2.30 or 0.06% while Silver futures were at $23.270, higher by $0.132 or 0.560%.
The October Gold futures had ended with declines of Rs 292 or 0.50% per 10 gram at Rs 58,638 on Tuesday while the December Silver futures closed lower at Rs 71,905, down by Rs 37 per kg or 0.05%.
“US August CPI inflation data will be released today, which will be crucial for the yellow metal. Although the Federal Reserve is expected to skip a rate hike in September policy, hot inflation data may lead to a rate hike later this year,” Praveen Singh – Associate Vice President, Fundamental Currencies and Commodities at Sharekhan said.
Singh said that the inflation data topping the forecast will be bearish for the yellow metal unless the US yields dip as he placed the support in Comex gold at $1,900-$1,885 while putting resistance at $1,932-$1,955.”On the daily chart, October Gold futures have recently experienced a significant decline, breaching both its 50-day and 100-day Exponential Moving Averages (EMA) which is a signal of bearish sentiment in the market, Neha Qureshi,” Senior Technical & Derivative Analyst at Anand Rathi Commodities & Currencies said.
Moreover, the Relative Strength Index (RSI) indicator has displayed a negative divergence, suggesting a potential downward trajectory in the price while the momentum indicator, Moving Average Convergence Divergence (MACD) has signaled a negative crossover, indicating that the bears have gained control of the market, Qureshi highlighted.
She sees immediate resistance at Rs 59,000-59,400 while support at Rs 58,275-57,900.
Gold futures are down 1.26% or by Rs 748 on the month-to-date basis while they have gained 6.56% or by Rs 3,609 on the year-to-date basis, Anuj Gupta, Head Commodity & Currency at HDFC Securities, of HDFC Securities told ETMarkets.
As for Silver futures, the declines are to the tune of 4.95% or Rs 3,748 in September while the gains this year stand at 3.63% or Rs 2,521, he said.
The physical price of gold in top Indian cities like Delhi and Ahmedabad is around Rs 59,800 per 10 gram while silver is trading at Rs 73,000.
Intraday Trading Strategy by Neha Qureshi
– Sell MCX October Gold futures at Rs 58,700 with a stop loss of Rs 59,100 and a price target of Rs 58,000.
– Sell MCX December Silver futures at Rs 72,200 with a stop loss of Rs 73,200 and a price target of Rs 70,200.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)