Gold prices fell on Monday tracking a firm US dollar. Greenback revived on fears of further rate hike by the US Federal Reserve in its next monetary policy meeting after the non-farm payroll data pointed to a tighter labour market, dashing hopes of any rate pause in the immediate term.
MCX June gold futures were trading at Rs 60,024 per 10 grams on Monday at 10 am, down Rs 487 or 0.80%. Meanwhile, May Silver futures were trading at Rs 74,230 per kg, down Rs 340 or 0.46%.
In the international market, gold futures were trading at $2,007.10 per troy ounce, down $19.30 or 0.95% on the Comex while silver futures were trading at $24.915, lower by $0.178 or 0.71%. Meanwhile, Spot gold was down 0.4% at $2,000.57 per ounce, as of 0041 GMT, Reuters reported.
Friday’s data from the US Labor Department showed non-farm payrolls increased by 236,000 jobs in March, versus expectations of 239,000. The data also showed the unemployment rate dipped to 3.5% from 3.6% in February.
“Spot gold is trading with a loss of nearly 0.70% from Thursday’s closing at $1992 as better than expected headline figure and unemployment rate have raised the possibility of a rate hike by the US Federal Reserve from around 55% to 80% at the upcoming May FOMC meeting,” Praveen Singh, Assistant Vice President, Fundamental Currencies and Commodities Analyst at Sharekhan by BNP Paribas said.
“The US employers added 236k jobs as against the forecast of 230k jobs, while the unemployment rate in March slid to 3.50% from 3.60% in February thus trailing the forecast of 3.60%. This report differs from most of the previous nonfarm payroll reports as this time bulk of the jobs added are in the full-time employment category, which is positive for the US Dollar,” Singh said.
Meanwhile, Saumil Gandhi, Senior Analyst (Commodities), HDFC securities said, “We expect Comex spot gold prices should trade in range of $1959 to $2004 per ounce for the day with negative bias. Comex spot gold having support at $1959/1935 per ounce and resistance at $2004/$2024 per ounce for the day. MCX Gold June future has support at Rs 59,400 per 10 grams and resistance at Rs 60,300 per 10 grams.”The all-time high of MCX gold futures stands at Rs 61,181 per 10 grams. Meanwhile, Silver futures last week hit their highest level (Rs 75,175 ) in 32 months on an intraday basis.
“Gold prices have corrected by over 2% or Rs 1,100 over a week. The year-to-date gains are 8% or Rs 4,399 while the month-to-date gains are at 2.55% or Rs 1,514. As for silver futures, the YTD gains are at 7.43% or Rs 5,157 while the MTD gains at 3.05% or Rs 2,202,” said Anuj Gupta, Vice President (VP), Commodity and Currency Research at IIFL Securities.
He recommends a buy-on-dips strategy.
Triggers for bullion
– China-Taiwan issue is a geopolitical risk, which may support the metal at lower levels, Singh said. Support is in the $1975-$1980 zone, followed by $1950. Resistance is at $2010 followed by $2032, he said, adding that traders will look forward to selling the metal above $2000 in absence of any major risks.
– Dollar Index: Movement of dollar is inversely related to the price movement in bullion. A weaker greenback makes dollar-priced commodities more appealing to holders of other currencies.
Intraday Trading Strategy by Anuj Gupta
While spelling out the day’s trading strategy, Gupta advised investors with a near-term view to remain on the buying side. He sees gold prices hitting the Rs 62,000 mark in April.
- Buy MCX June Gold futures at Rs 60,200 with a stop loss of Rs 59,850 and price target of Rs 60,900.
- Buy MCX May Silver futures at Rs 72,700 with a stop loss of Rs 72,000 and price target of Rs 74,000.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)