Moody’s downgrade of the US credit ratings and dollar weakness spurred gold prices on Monday, giving a fresh impetus to the yellow metal after a Friday fall. The domestic prices also took cues from overseas markets, jumping by over Rs 1,500 or 1.7% in the morning trade to cross Rs 94,000 mark.
While they conceded some gains, the MCX June contracts were still trading with an uptick of Rs 700 or 0.80% around 10 am. The price of gold futures on COMEX was hovering around $3,212.70 per troy ounce, gaining $25.50 or 0.80%.
The dollar index (DXY) was hovering around 100.84 against a basket of six top currencies, down by 0.25 points or 0.25%. It has fallen by nearly 1% over five sessions.
Notwithstanding this, gold posted its worst last week since last November, as increased risk appetite from the US-China trade agreement weighed.
Commenting on the current trends, Jateen Trivedi, VP Research Analyst – Commodity and Currency, LKP Securities, said that global cues are weighing heavily on gold. “Hopes of a trade breakthrough between the Eurozone and China are easing risk-off demand for gold. Russia-Ukraine peace talks progress adds to the pressure, though uncertainty remains around whether Putin or Trump will attend the Istanbul round. This has created a floor for gold, but not enough to trigger aggressive buying. Market remains cautious, leaning toward a corrective phase,” he said.
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Tech view
While gold’s fundamentals will impact the next leg of the rally, Trivedi has identified 5 triggers on the technical charts, which he said could give trading insights.
Key support & resistance: Gold on MCX has formed lower highs and lower lows on the daily chart, confirming a short term bearish trend. Price faced stiff rejection near Rs 94,500–95,000 zone and is now sustaining below both short-term EMAs. Immediate resistance remains at Rs 95,000, while key downside support lies at Rs 91,000 and then Rs 89,000. A break below Rs 91,000 may trigger further selling pressure toward Rs 89,500.
RSI (14): RSI has slipped to 46.37, reflecting weakening momentum. It is below the midline of 50, suggesting a bearish bias and no signs of bullish divergence yet.
Bollinger Bands: Price has slipped below the midline (20-SMA) of the Bollinger Band, with a tendency to drift toward the lower band near Rs 91,500. The expansion of bands hints at increased volatility, and a move below the lower band may accelerate downside momentum.
EMA 21 & EMA 10: The 10 EMA has crossed below the 21 EMA, signalling a short-term bearish crossover. Price is now sustaining below both EMAs, confirming downside pressure. The slope of both EMAs is negative.
MACD (12,26,9): MACD line is at 227.10, while the Signal line is at 759.44, with a deepening negative histogram of -532.34, indicating a strengthening bearish trend. No sign of bottoming out yet.
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Fundamental factors
This week lacks any major high-impact economic releases.
“PMI and housing data will offer some direction, but the absence of heavy macro drivers could keep prices under pressure unless fresh geopolitical surprises emerge,” Trivedi said.
Among domestic factors, the movement of the rupee will impact prices. A weaker rupee against the USD makes imports expensive, lending support to the prices.
“Rupee remains range-bound between 85–86 due to mixed signals from the dollar index and global political cues. A stable rupee adds to the pressure on MCX gold as there is no currency-based support on the domestic front,” the LKP Securities analyst said.
In his view, gold looks vulnerable below Rs 95,000, and any pullback toward Rs 93,500–Rs 95,000 can be used to initiate short positions with a target of Rs 91,000–Rs 89,500 and a stop-loss above Rs 95,600.
The broader structure remains weak unless global uncertainties sharply intensify, Trivedi said, warning of consolidation with downward bias amid a lack of major US data and easing geopolitical tension.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)
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