Yellow metal eases with crucial support at Rs 47,600/10 gm

India Gold August Futures eased from 48,000 per 10 gm on June 26 following positive trend in equity markets, but rising number of COVID-19 cases is likely to support safe-haven buying, suggest experts.

On the Multi-Commodity Exchange (MCX), August gold contracts were trading lower by 0.04 percent at Rs 47,921 per 10 gram at 09:20 hours. July futures for silver were trading 0.10 percent lower at Rs 48,066 per kg.

Gold and silver prices settled on a mixed note on Thursday taking a clue from U.S. economic data. Gold settled slightly weak at $1770.60 per troy ounce, while Silver settled on a positive note at $17.89 per troy ounce.

In the domestic market, both the precious metals settled on a mixed note. Gold slipped around 0.50 percent and closed below 48000 per 10 gm while Silver gained around 1 percent and settled around 48150 levels.

International prices have started flat June 26 morning in Asian trade. Traders will be better off buying the yellow metal on dips for both Gold and Silver. Crucial support is placed at 47,600 while a close above Rs 48,080 could resume bull run, suggest expert.

β€œWe expect both the precious metals remain volatile and expected to hold crucial support levels of $1755 per troy ounce and $17.55 per troy ounce respectively. Rising coronavirus cases and grimed outlook on global economy is quite supportive for both the precious metals,” Manoj Jain, Director (Head - Commodity & Currency Research) at Prithvi Finmart Pvt Ltd told Moneycontrol.

β€œAt MCX gold prices are expected to hold crucial support of 47600 if it is break and sustain above 48080 could extend the gains towards 48300-48500 levels again. Buy on dip strategy will work in both the precious metals in today's session,” he said.

Trading Strategy

The surge in fresh COVID-19 cases kept downside limited, however rebound in the US Dollar kept upside limited. China is on a holiday on Friday and a lack of major trigger points could keep prices in a small range and tracking the equity markets.

Technically, MCX Gold August contract traded in a range of 47823-48173 levels with negative bias indicating some sideways consolidation to continue. Support is placed at 47750-47500 levels where Resistance is at 48200-48350 levels.

MCX Silver July traded in 47306-48190 levels range where it has bounced from 47300 levels and closed on some positive note. Still, downside momentum to continue and prices can trade in a range of 46800-48100 levels.

COMEX Gold seems to have taken a pause as it trades in a narrow range above $1770/oz. Gains in the U.S. Dollar Index has capped the gains in gold even though other supportive factors like increasing virus risks and US-China tensions are still intact. ETF witnessed some profit-taking as gold failed to move above the multi-resistance zone of $1789-1792.

However, the general bias still remains on the upside until $1750/oz holds. A strong breakout might be seen on closing above $1788-1792/oz.

-Published on June 27th, 2020