Gold prices fall after gaining in opening deals, off Rs 11,700 from record highs; may hit 45,200 on MCX soon

Gold prices edged lower in afternoon deals on Monday, after opening higher. MCX gold April futures were trading Rs 203 or 0.45 per cent down at Rs 44,480 per 10 gram, while silver May futures were ruling at Rs 66,030 per kg, up Rs 427 or 0.65 per cent. Currently, the rising US bond yields are capping prices for gold. From a record high of Rs 56,191 per 10 gram on MCX in August 2020, gold prices have tumbled Rs 11,711 per 10 gram or 20.84 per cent. Ravindra Rao, VP- Head Commodity Research at Kotak Securities, said that continuous ETF outflows, upbeat non-farm payrolls data and higher US, and global bond yields have been weighing on gold prices.

Bhavik Patel, Senior Technical Research Analyst, Tradebulls Securities, told The Outlooker Online that gold is flirting with the levels of $1700 in COMEX with the US Senate passing a $1.9 trillion deal which had little impact on the yellow metal prices. Although the deal will have to be passed by house to vote on Tuesday after which the US President can sign the order. Patel added that going forward, if US stimulus is passed by the house, then the US dollar may weaken as monetary stimulus will create additional interest expense pressures for the US government which will be beneficial for gold prices.

Also read: Gold, silver prices fall for third week straight; will precious metals continue to decline?

What do technical charts say?

Rajesh Palviya, Head – Technical & Derivatives Research, Axis Securities Ltd, told The Outlooker Online, technically, MCX gold is trading at the lower boundary line of a channel at 44,000 levels. Also at this level, its momentum indicator RSI (14) shows an oversold zone. This indicates that gold may bottom out near 44,000 zones. “A breakout above Rs 44,650 gives more conviction of a rally towards Rs 46,000. On the other hand, if prices fall below Rs 43,850 then further correction is expected. Overall, gold is on the verge to change its trend,” Palviya said.

Geopolitical risk in Saudi Arabia may provide further support to gold prices as one of the most protected crude facilities in the world came under attack on Sunday, says Jigar Trivedi, Fundamental Research Analyst, Anand Rathi Shares and Stock Brokers. “Even as it is a holiday-shortened week for India, MCX gold may reclaim Rs 45,000-45,200 during the week,” Trivedi added.

Bhavik Patel from Tradebulls Securities said that in the short term, gold is expected to test levels of Rs 44,000-43,800 on MCX. Bullish case scenario will only come when gold manages to break Rs 45,500 on MCX which will signal the presence of buyers. “Till then it is ‘sell on rise’ with a short-term target of Rs 44,000-43,800,” Patel said.