GOLD

FUNDAMENTALS

Gold traded positive on MCX on Saturday with the most active December contract gaining Rs 41 at Rs 10019 per 10 gm. Earlier, the record high levels of crude oil prices and fresh all time low of dollar against euro pushed the gold prices to 28 years high levels Friday. Gold for December delivery on the COMEX added $16.5 to close the session at $787.5 an ounce.

The dollar dropped against the major counterparts Friday touching record lows against euro on rising expectations of 25 basis point interest rate cut by Fed. The dollar index fell 0.3% at 77.04.  After the Federal Reserve's 0.5% rate cut, the U.S. yield advantage over other countries diminished and will drop further as more rate cuts are made.

The investors continue to hop on gold and there is no sign of profit booking in the metal despite its recent run-up in prices. The open interest has hit a fresh record high of 505,224 at Comex. However, if the Fed doesn’t cut the interest rates as per market expectations, a heavy correction can be seen. 

Meanwhile, geopolitical tensions continue to increase gold’s allure as safe haven investment.

Turkey has gathered troops along the border and the Turkish military has been hitting suspected rebels bases.

TECHNICALS

The prices closed well above short and medium term EMAs, which supports bulls. Rising MACD in positive region shows increasing bullish momentum. RSI and stochastic are running upward supporting bulls, but overbought levels of RSI warrants some caution to bulls.  The prices are likely to see movements with positive bias.

Click here to download full report

Reliance Money Disclaimer