The dollar index saw some profit booking at higher levels last week due to the US inflation print, which belied expectations. The rush to book profit drove gold prices higher.
The rupee at a 3-year low also gave the gold prices a leg to stand on.
In medium term, gold looks bullish as Iran-Syria geopolitical conflict is keeping its safe haven appeal glowing. There are concerns growing on the crude oil front as prices raced to multi year high.
The tame US inflation numbers might just prompt the Fed to go for less aggressive rate hikes. Trade talks between the US and China are still meandering, which could give equities much pain in coming days.
Rising Chinese debt is another cause of concern for global financial markets. Considering the current fundamentals and global dynamics, we expect gold to continue to hold $1,300 levels and hit $1,334-1,344-1,353.
Technical chart of gold
(Source: Investing.com, mcxindia.com)
Gold hit a low of $1,303 last month. Technical chart shows the yellow metal in a sweet spot. It could test aforesaid levels in coming days as soon as it scales $1,306.
Fresh selling is expected only when it closes below $1,300. And in that case, it could flirt with $1,292-1,284-1,274. But chances look very slim for any downside.
In the domestic market, gold is able to hold Rs 31,000 per 10 grams at MCX. We expect it to touch Rs 31,600-31,760-31,900 in days to come. Fresh selling can kick in only when it settles below Rs 31,200. Once that happens, it could test Rs 30,800-30,680-30,550.
In short to medium term, it looks bullish and traders could buy gold in Rs 31,450-31,380 with strict stop loss below Rs 31,150 on a closing basis for upside target of Rs 31,600-31,760-31,900.
Gold (Buy) Rs 31,450-31,380 SL 31,150 (closing basis) Targets Rs 31,600-31,760-31,900.
(Manoj Kumar Jain is Director of Commodity and Currency at IndiaNivesh Commodities. He has 20 years of experience in financial service sector. Views expressed in this article are author’s own and do not represent those of ETMarkets.com. Readers are advised to consult their financial advisers before taking any position based on these observations.)