Commodity Radar: At a lifetime high of Rs 1.2 lakh/10 grams, gold breaches a major hurdle. What trade to make?
While US President Donald Trump’s tariff policy has been propelling the yellow metal prices, the domestic rates have also been helped by a weaker rupee against the dollar.
Today, the December gold futures on the MCX hit a lifetime high of Rs 1,20,075, surging 1.6% over the Friday closing price of Rs 1,18,113. Meanwhile, on the COMEX, the prices rose 1.5% or by $57.30 to trade around $3,966.20.
Commenting on the current trends, Jateen Trivedi, Vice President – Research Analyst – Commodity and Currency, LKP Securities said that the spike in gold prices were on twin triggers – trade tariffs and rupee weakness.
US President Donald Trump’s tariff salvos remain unabated. His recent announcements on H1-B visa and the pharma sector are being seen as twin blows, with the actual impact still to play out. The US administration, via an executive had, raised the annual H-1B visa application fee from $1,000 to $100,000 for every new applicant. It also imposed a 100% tariff on patented and branded drugs imported to the US.
The chances of a Fed rate cut amid weak job markets has given fresh impetus to gold, Trivedi said, highlighting that a rate cut will be a positive trigger for the non-yielding gold. Among local factors, INR’s continued weakness against the US dollar is supporting the gold prices.Decoding the technical charts, Trivedi lists 5 triggers that could help traders take informed decisions:
1) Key support & resistance
Immediate Resistance: The recent high near 1,19,048 (as marked on the right) acts as immediate resistance. A break above this suggests a strong continuation of the rally.
Multiple support levels are seen on the charts. The immediate strong support is roughly between Rs 1,17,315 and Rs 1,16,052.
Major support: The thicker black line (which appears to be a significant moving average or previous resistance turned support) is around Rs 1,16,052. The proposed stop loss of Rs 1,17,400 is near the lower end of the immediate strong support cluster, offering a tight risk management point.
2) Momentum indicator
RSI current reading is at 64.03. A reading above 50 and nearing 70 suggests the underlying trend is bullish, but the momentum is strong and approaching the overbought territory (usually ≥70). The RSI has recently pulled back from a higher level, indicating a slight cooling of momentum, which aligns with the price consolidation. This pullback may be viewed as healthy before another move up.
3) Bollinger Bands
The price bars are currently trading near the upper bollinger band, indicating strong momentum and a position at the higher end of the typical volatility range. The bands appear to be slightly expanding, confirming the recent increase in volatility and upward trend strength.
4) Moving averages – EMA 8 & EMA 21
The faster EMA is above the slower EMA, and both are sloping upwards and the price is trading above both EMAs. This configuration is a classic strong bullish signal, confirming the uptrend.
Pullbacks toward the yellow (EMA 21) line often serve as buying opportunities in a strong trend.
5) MACD
The MACD is showing a bullish crossover and a strong confirmation of the uptrend. The histogram has recently turned negative, though it is small, which reflects the recent short-term price consolidation/pullback.
This suggests that the short-term downward pressure is increasing, but the overall bullish trend (MACD lines above zero) is still intact.
Gold trading strategy
Buy Gold December futures near Rs 1,18,500 for targets of Rs 1,20,000. He places the stop loss at Rs 1,17,400.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)