Gold traded range bound on Friday in the absence of any significant trigger. The yellow metal is near its three-week lows dragged by the strength in the dollar index (DXY) which has sustained above the 102 mark against a basket of six top currencies. Street awaits the US non-farm payroll data due for a release, later in the day.
The payroll data is an important indicator of which way the Federal Reserve could move. A strong jobs number could be antithetical to its plans to push a pause button. That could potentially strengthen the dollar, increasing the opportunity cost of holding the non-yielding bullion.
The DXY is up 0.75% over the past five sessions.
The October gold futures were trading with declines at Rs 59,400 per 10 grams on the MCX in the opening trade, down Rs 31 or 0.05% from the Thursday closing price. Meanwhile, September Silver futures were trading at Rs 72309, down Rs 213 or 0.29%. MCX gold ended with minor losses on Thursday, while silver futures fell by 0.62% or Rs 449.
On the Comex, Gold futures were trading at $1,971.20 per troy ounce on Friday, up $2.40 or 0.12% while Silver futures were trading at $23.630, up $0.067 or 0.280%.
“Today’s US nonfarm payroll report for July will be crucial for the metal. Going by ADP (employment report), an upside risk to the data exists, however, the June ADP data overestimated the nonfarm payroll data, so caution is warranted,” Praveen Singh – Associate Vice President, Fundamental Currencies and Commodities at Sharekhan said. He sees support at $1,930/$1,918/$1,890 in the Comex gold while resistance at $1,950/$1,965/$1,975.
The outlook remains bearish but a weak US job report can help the yellow metal shake off some of the negativity around the metal, according to the Sharekhan analyst. On the technicals, Amit Khare Associate Vice President at Ganganagar Commodity Limited (GCL) Broking said that the bullion’s daily chart shows the metal trading in the demand zone with a likely upside movement in the near term.
“Momentum Indicator RSI is also indicating the same, so traders are advised to make fresh buy positions in Gold and Silver near the support level with a stop loss at the support level while looking to book profits near the resistance levels,” Khare said.
He sees support in October Gold futures at Rs 59,300 – Rs 59,100 and resistance at Rs 59,700 – Rs 59,900. As for September Silver futures, support is seen at Rs 72,200 – 71500 and resistance at Rs 73,500 – Rs 74,000.
“Gold futures on the MCX have declined by 0.07% or Rs 39 per 10 grams on a month-to-date basis. They were up by 8.02% or Rs 4,415 on a year-to-date basis. Meanwhile, Silver futures have lost nearly Rs 2,905 or 3.85% in value terms in August while gaining 4.48% or Rs 3,109 on the YTD basis,” the commodity and currency analyst said.
“The price of physical gold in bullion markets in Delhi-NCR is around Rs 60,500 per 10 grams while that of Silver is Rs 74,500 per kg,” Gupta added.
Intraday Trading Strategy by Anuj Gupta
– Buy MCX October Gold futures at Rs 59,250 with a stop loss of Rs 59,000 and a price target of Rs 59,700
– Buy MCX September Silver futures at Rs 72,500 with a stop loss of Rs 71,900 and a price target of Rs 73,500.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)