Gold is struggling to get fresh buyers that would take it decisively above the psychological level of $1,200. The yellow metal tumbled last week and made a low of $1,181 per ounce. However, it managed to bounce from those levels, recovering some of the loss, and closed at $1,191 per ounce, down 0.7 per cent for the week.
But silver outperformed gold last week, as expected. The global spot silver surged over 2 per cent to close the week at $14.65 per ounce.
Dollar Drags Gold
A strong surge in the US dollar index (95.13), after the GDP data release, dragged gold prices lower. The US grew at 4.2 per cent in the second quarter, the strongest in about four years. The dollar index, which was hovering in a narrow range around 94, surged after the data release to make a high of 95.35 before closing the week at 95.13.
The price action over the past couple of weeks indicate that the index is lacking fresh sellers to drag it decisively below the 94-93.85 support zone. Immediate support is at 94.75. As long as the index remains above 94.75, an up-move to 96 is possible in the coming days. A strong break of 96 will then increase the likelihood of the index extending its rally to 97 over the short term. Such an up-move in the index will keep the gold prices under pressure.
On the other hand, if the dollar index reverses lower from 96, it can fall to 95 or even 94 again. In such a scenario, a range-bound move between 93.85 and 96 can be seen for some time.
Gold Outlook Report
The global spot gold ($1,191 per ounce) is currently getting support around $1,180. If it continues to trade above this support, an up-move to $1,205 and $1,210 is possible in the coming days. Broadly, gold can remain in a sideways range between $1,178 and $1,213 for some time. A breakout on either side of $1,178 or $1,213 will then decide the next move.
A strong break and a decisive close above ₹1,213 will ease the downside pressure. Such a break can trigger a corrective rally to $1,235 or $1,240 over the short term. On the other hand, if gold declines below $1,178, it will come under renewed pressure. In that case, the yellow metal can tumble to $1,160 and $1,155 thereafter.
On the domestic front, the near-term outlook for the MCX-Gold (₹30,481 per 10 g) is mixed. The support at ₹30,270 has held well last week. The contract made a low of ₹30,220, and bounced higher in the final trading sessions of the week. Immediate support is at ₹30,370.
If the contract manages to sustain above this support, an up-move to ₹31,000 is possible. Inability to breach ₹31,000 can drag it to ₹30,500 and ₹30,300 again. On the other hand, if the contract declines below ₹30,370, the possibility will remain high of it breaking below ₹30,270. The ensuing target on a break below ₹30,270 is ₹29,950.
Broadly, a range-bound move between ₹30,270 and ₹31,000 is likely in the near term. A breakout on either side of ₹30,270 or ₹31,000 will then determine the next move. Traders can hold the long positions taken last week. Retain the stop-loss at ₹30,175 for the target of ₹31,300. Revise the stop-loss higher to ₹30,750 as soon as the contract moves up to ₹31,100.
