Commodity Radar: Gold prices fall by Rs 2,400/10 gram amid “total reset” in US-China trade relations. Time to buy on dips?

Domestic gold prices fell sharply on Monday taking cues from the international rates after hopes of a resolution on the US-China tariff war strengthened. The yellow metal prices on the MCX fell by over Rs 2,400 per 10 gram or 2.5% to hit the day’s low of Rs 94,094.

U.S. President Donald Trump had on Sunday hailed a “total reset” in U.S.-China trade relations after the first day of talks between senior officials of both countries in Switzerland. “We want to see, for the good of both China and the US, an opening up of China to American business,” Trump said on Truth Social platform.

The June gold contracts had ended at Rs 96,518 on Friday.

The COMEX gold was trading around $3,286.60 per troy ounce, gaining by $57.40 or 1.72%.

As a result of the development, the dollar index (DXY) gained 0.21% and was hovering around 100.55 against a basket of six major currencies. The greenback has gained 0.72% over the past 5 days. The movement in the dollar is inversely related to the movement in DXY.

Moreover, the ceasefire between India and Pakistan also calmed down nerves, likely impacting the domestic prices where the price correction was sharper. Commenting on the current trends, “Gold prices on MCX have pulled back slightly after hitting a recent high above Rs 99,000, now trading around ₹95,000. The rally appears to be losing steam as technical indicators suggest cooling momentum, while global fundamentals hint at potential easing of the trade war narrative,” said Jateen Trivedi, Vice President, Research Analyst – Commodity and Currency at LKP Securities.

Tech view

After peaking, gold prices have shown signs of exhaustion, and the current structure is that of a potential lower high, with the price unable to close above previous highs despite intra-day strength, Trivedi said, placing stiff resistance at Rs 97,800 – Rs 98,200 while immediate support at Rs 93,000 and stronger support near Rs 91,000.

“The RSI (14) has retreated to 65 from overbought levels near 75, indicating negative divergence. This suggests momentum is fading even as price tries to make new highs, a potential warning signal for bullish traders. A drop below 60 could trigger deeper corrections. Gold has started to revert from the upper Bollinger Band, with narrowing band width hinting at possible range-bound consolidation. Price action is moving back toward the median, supporting a short-term cooling-off phase after a strong vertical rally,” this analyst said, decoding the chart pattern.

Trivedi said that the 21-EMA remains an important dynamic support, and any decisive close below this could lead to a test of the 50-EMA near Rs 90,500.

MACD remains in a positive crossover with histogram values still green but narrowing, indicating deceleration in bullish momentum. While no bearish crossover is confirmed yet, traders should watch for it in the coming sessions for trend reversal cues.

His strategy for now is a buy-on-dips above Rs 93,000.

Fundamental tiggers

Economic data from the US like the CB Consumer Confidence, Q1 GDP, Core PCE, ADP Employment, and Nonfarm Payrolls are likely to impact gold’s price movement.

“Weak numbers could reignite rate cut hopes, supporting gold, while stronger data may pressure prices lower,” the LKP Securities analyst added.

Dollar index and the rupee movement are important factors that could determine international and domestic prices. A weaker rupee against the dollar makes imports more expensive.

“Currency consolidation adds uncertainty, and USD/INR is oscillating between Rs 85.00–Rs 85.75, showing range-bound movement amid dollar volatility and robust FII inflows. This has kept gold prices choppy in INR terms despite COMEX movements. A breakout in the rupee

range will influence domestic price behaviour,” Trivedi opined.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)