MCX Gold Buy on Dips: Since the beginning of this month, gold has continued to be in an upward trend. Especially post the mixed FOMC minutes, gold held high. The minutes didn’t hint at any timeline for scaling-back the asset purchases by the Federal Reserve so that has been a positive factor for gold. Also, the focus on the rising delta virus cases, the worries over lockdown kept the gold prices steady.
However, the shoot-up in US inflation data was a surprise to the market participants, and pushed the dollar higher on hopes that Fed may start tapering its asset purchase programme by the end of this year. US June CPI data surged to 5.4% on year compared to 5% last month. Yesterday, the FOMC member Daly said that it is appropriate to start talking about tapering the bond buying. However, Daly expects the long run inflation to remain very steady, and that it is premature to discuss timing of Fed rate lift off.
MCX Gold: Steady ahead of Powell’s testimony
So the market’s focus has shifted to Fed Chair Jerome Powell’s two-day testimony. Powell’s reaction to the surging US CPI data and hints on how long can Federal Reserve policy stay ultra-loose will be eyed. We expect Powell to reiterate a dovish stance tonight, but the gold traders will refrain to place fresh bets before it. Powell’s dovish tone, will be positive for the bullion. But if Powell mentions about tapering the bond purchases then we may see the MCX gold prices to fall.
As seen in the following MCX Gold Daily chart (cmp 47993), after hitting more than two and a half month low of 46330 during end of June, prices made a reversal to currently hover around 48000. The immediate support is at 47300 and strong 100 days moving average as well as trend line support is located around 46900.
The long term view on yellow metal remains positive until it trades above 46900, hence every dip is a buy opportunity at lower levels. On upside, immediate Bollinger band’s upper level resistance lies at 48200 and then crucial top-to-top trend line resistance is at 48700. Only a consistent trading above 48700 will open doors for 49650-50500. Below 46900 next support is at 46330 (Bollinger band’s lower level) and if prices sustains below this then only we can see further downwards move.