Yellow metal flat; could face resistance around Rs 48,300

India Gold August futures are trading flat with a positive bias on June 23 tracking muted trend in the international spot prices. Experts feel that the trend in the yellow metal is likely to remain sideways, and it could face resistance around Rs 48,300 per 10 gm.

On the Multi-Commodity Exchange (MCX), August gold contracts were trading higher by 0.02 percent at Rs 47,952 per 10 gram at 09:30 hours. July futures for silver were trading 0.28 percent lower at Rs 48,500 per kg.

Gold and silver extend gain in the international market on Monday. Gold settled at $1,766 per troy ounce and Silver settled at $17.90 per troy ounce, but due to strength in rupee both the precious metals settled almost flat in the domestic market.

“Fresh stimulus talks of around $1 trillion in the US restrict gains in both the precious metals. However, lower than expected U.S. new home sales numbers and weakness in dollar index support bullion prices,” Manoj Jain, Director (Head - Commodity & Currency Research) at Prithvi Finmart Pvt Ltd told Moneycontrol.

“Indo-China border tensions are also supported safe-haven buying in both the precious metals. Both the side move is expected in precious metals in Tuesday's session,” he said.

Jain further added that at MCX, Gold is expected to face resistance around 48,300-48,500 zone, 47,500 act as major support for the day. Silver prices also expected to face resistance around $18-18.14 per troy ounce, $17.55 act as major support for the day.

Trading Strategy

Domestic bullion could trade flat Tuesday morning, tracking a weak start in the international markets.

Technically, LBMA GOLD Spot had a volatile session with positive bias where prices made a high of $1,763.14 levels indicating a strong rally to continue up to $1,771-$1,784 levels. Support seen at $1,737 levels.

MCX Gold August contract made an all-time high level at 48,289 and had a volatile session where it gave a close at 47,950 levels indicating bullish momentum will continue up to 48,150-48,400 levels. Support holds at 47,750 levels.

COMEX Gold continues the positive tone after a 0.8% gain yesterday. After a long consolidation, gold has finally come out of a broad range of $1,680-1,750.Gold’s positive momentum looks to stay as it is currently supported by safe-haven buying amid rising virus cases, US-China tensions, geopolitical issues relating to Hong Kong, and mixed economic data from major economies.

Gold ETF continues to attract investors as seen from SPDR Gold ETF holdings which have risen to 2013 highs.

Gold may continue the sideways to positive move as market players assess virus risk however general bias may be on the upside amid increasing challenges to the global economy and continuing stimulus measures.

Surging coronavirus cases around the world amid rising global geopolitical instability continues to lift the safe-haven demand of gold. A weak US dollar and hopes of fresh economic stimulus are also offering support to prices.

Meanwhile, increased global economic sentiments and steady equities are raising concerns about high-level profit booking.

Technical Outlook (London spot):

Buying momentum is likely to continue as long as prices stay above $1,710. However, strong resistances are seen at $1,765 followed by $1,800 levels. The immediate downside reversal point is $1,664.

-Published on June 23rd, 2020