Gold rates extended losses on Friday on the account of the strengthening of the Indian rupee against the US Dollar. On MCX, gold April futures had been trading Rs 317 or .71 per cent down at Rs 44,224 per 10 gram. On the other hand, silver May futures tumbled Rs 407 or .62 per cent to Rs 65,514 per kg on the Multi Commodity Exchange. MCX gold is probably to finish on a bearish note for the third straight week, as the yellow metal rates have currently declined more than 3 per cent on a week-on-week basis, says Jigar Trivedi, Fundamental Research Analyst, Anand Rathi Shares and Stock Brokers. Moreover, holdings of the world’s biggest gold-backed exchange-traded fund (ETF), SPDR Gold Trust, have also plunged for the 13th consecutive session.
One of the important motives behind a fall in gold rates is increasing US bond yields, which has appreciated to 1.57 per cent right after Federal Reserve Chair Jerome Powell disappointed investors with his view on a surge in yields that pushed up the dollar and bond yields. Powell repeated his pledge to preserve credit loose and stated despite the fact that the rise in yields was ‘notable’, he did not contemplate it a ‘disorderly’ move. Trivedi also added that the concentrate will shift to US non-farm payrolls for February along with the unemployment price. “The dollar index and 10-Year bond yield are new entrants in the focus list. The yellow metal is likely to stay under pressure since sentiment is weak in bullion space amid sharp rise in dollar index and bond yield in the US,” he added.
Following a practically 30 per cent rally in MCX gold price tag in 2020, the yellow metal has been witnessing intense stress. Indian share industry volatility and increasing bond yields have pushed down the gold rates by Rs 11,967 per 10 gram or 21.29 per cent from a record higher of Rs 56,191 per 10 grams hit in August 2020. While on a year-to-date (YTD) basis, gold has plunged Rs 5,952 or 11.86 per cent. Looking at the sentiment, Bhavik Patel, Senior Technical Research Analyst, Tradebulls Securities is nonetheless bearish in quick to medium term and expects quick bounce back from Rs 43,800 as gold is in the oversold area (RSI 14 is trading at 25 on every day scale).
Bhavik Patel told TheSpuzz Online that historically gold has bounced back from RSI 14 anytime it has traded about 30 level and at the moment it is trading at 25, which suggests that it will bounce in quick-term.
Following the dovish comment of Fed chairman Jerome Powell, the US bond yield climbed sharply. Treasury yields have risen more than 60 basis points (bps) in the final handful of days which has impacted gold’s status as a hedge against inflation. Kshitij Purohit, Lead Commodities & Currency at CapitalVia Global Research Limited, told TheSpuzz Online that for the quick-term target, assistance is close to April month low of 43600. RSI is hovering close to 27 and beneath the level of 30, it is in oversold territory. “On the Comex, $1660-1680 is a strong support zone. Prices may come to this level in the short term. While in the medium-term, if it breaks below Rs 43,600, it could come to Rs 42,500 levels on the MCX,” he added.
Where will MCX gold go in close to-to medium term?
Jigar Trivedi from Anand Rathi Shares and Stock Brokers, says that MCX gold could locate assistance close to Rs 43,900-43,600 in the quick term. “We recommend to short on every bounce,” he stated. Positionally, for investors Trivedi recommended that these are the most effective levels to begin accumulation as gold has currently fallen by 21 per cent from an all time higher of Rs 56,191 per 10 gram.
While Bhavik Patel from Tradebulls Securities stated now that Rs 44,500 is breached, levels of 43,300-43,000 are open for gold. “We believe gold might test those levels so in the short term we are bearish with any bounce opportunity to create fresh short positions,” Patel stated. He also added that trend reversal could only come above Rs 47,000 per 10 gram in MCX.
(The views and investment strategies in this story are expressed by the respective authorities of study and brokerage firm. TheSpuzz Online does not bear any duty for their suggestions. Please seek the advice of your investment advisor just before investing.)