By Bhavik Patel
Both gold and silver prices are witnessing healthy profit booking as fresh triggers for bull run up are absent. The US Dollar which also was on a downward spree found some momentum on the upside as other currencies like Euro and GBP got weak. The rally in Euro and Pound reversed after ECB stated that they are near to their peak interest rate and will monitor and take decision meeting by meeting instead of any preconceived notion.
Recession fears are causing silver price to underperform gold as more than 50% of silver demand comes from industrial applications. This week both US CPI and PPI came in line with expectation and in the next meeting, there is a high chance of a pause which the market has already factored. Now there aren’t any fresh triggers to take gold higher which is why we are seeing the correction. In the very short term, we expect prices to trade in range with no given data point. Gold range in MCX is expected to be between 60,000-61,200.
Gold rate is near the support (60,750) taken from the trendline nearing 54,771 and 59,621. Any closing below this level will confirm the end of the bullish trend in the short term. Gold price has multiple support in the vicinity of 59,600-60,200 as for the better part of April, gold has bounced back from those levels. Also giving credibility to the support range is the 50-day moving average coming around 60,680. So we believe the ongoing correction may continue till 60,000-59,500 and we would wait for some confirmation of bottom formation before recommending any buy position. Meanwhile any longs can be exited below 60,750 on closing basis and wait for any fresh technical sign for taking a long position.
(Bhavik Patel is a commodity and currency analyst at Tradebull Securities. Views expressed are the author’s own. Please consult your financial advisor before investing.)