Gold has turned dearer by more than Rs 2,800 per 10 grams led by a six-session rally. The yellow metal hit a fresh 52-week high of Rs 65,525 on Thursday, surpassing a key resistance level of Rs 65,500 within hours of its opening.
The recent surge in yellow metal in the domestic and international markets has been on hopes of an interest rate cut by the US Federal Reserve in June. Chair Jerome Powell’s words that the Central Bank could consider cutting rates in the coming months cheered the markets.
The uptick has surprised estimates of most analysts, surpassing targets suggested by them.
“As of now gold looks technically overbought and we advise investors to wait for correction. $2,100 and $2,088 is a good level to enter for higher targets,” Jigar Pandit, Vice President, Sharekhan by BNP Paribas told ETMarkets.
He expects gold to face crucial resistance of $2,200 until one gets data confirmation of a slowdown from the labour market report and CPI data. “We remain intact with our long-term target of $2,400 for 2024,” Pandit said.
Notwithstanding the recent weak US economic data, Pandit opines that this could be passed as a one-off case and he will look for key measures of CPI, PCE NFP and retail sales of upcoming months to get a confirmation of a June rate cut. In his view gold could lose its glitter in the coming months if the data is on a stronger footing, dashing hopes of cuts.
Analyst Neha Qureshi has also warned investors of a potential pullback in prices based on technical factors. The Senior Technical & Derivative Analyst at Anand Rathi Commodities & Currencies said that RSI of MCX April Gold contract is in the overbought territory. That said, the current pattern of higher highs and higher lows suggests a bullish trend, she added.
Today, the gold contracts breached its key resistance levels of Rs Rs 65-300-65,500.
Gold’s rapid strides have occurred as a new wave of buying by macro hedge funds and commodity trading advisors had bolstered bullish bets even as economic risks in terms of banking issues in the US and geopolitical tensions are adding fuel to the fire, Naveen Mathur, Director – Commodities & Currencies, Anand Rathi Shares and Stock Brokers said.
In his view, volatility is likely to persist in near term with a bullish bias for the current week. Mathur sees resistance in yellow metal at $2,188-$2,200 in the international spot markets while at Rs 66,400-66,500 per 10 gm for MCX futures contract. He places support at $2,080–2,070 and Rs 63,100-63,200, respectively.
His advice to investors is to hold on to current investments in gold or partially redeem given a favourable outlook. Any meanwhile corrective move will comes in the second half of the year as US fed resorts to actual rate cuts, the Anand Rathi expert opined.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)
