Commodity Radar: Gold shifts gears from sell on rise to buy on dips. 5 tech triggers explain why

Domestic gold prices shot up sharply on Monday, taking cues from the international markets. The sharp rally which has come following last week’s consolidation is due to concerns over the US shutdown as restlessness grows over the time of its ending.

The December gold futures surged by Rs 2,200 (2%) per 10 grams, hitting the day’s high of Rs 1,23,255 as of 2:30 PM today. The gold rate on COMEX was also up nearly 2% and was hovering around $4,086.90 per troy ounce around this time, witnessing a surge of $77.10.

With the shutdown in place for 40 days, it has entered a record duration, increasing concerns about the broader U.S. economic outlook.

Decoding the recent weak trends, Jateen Trivedi, Vice President, Research Analyst at LKP Securities, said that gold continues to price in optimism from positive US-China trade developments. The easing of global risk concerns has taken the sheen away from the yellow metal’s haven appeal, he said.

But dovish cues from the Fed and persistent tariff-related uncertainty are keeping safe-haven demand intact, and any signs of US growth slowdown or weak inflation data could extend gold’s rebound, he opined.

US CPI and Core CPI numbers will be announced this week, which could have a bearing on gold. “Softer inflation prints in the US could increase expectations for further rate cuts, providing near-term support for bullion,” Trivedi said.Among domestic factors, India’s CPI & WPI readings are due. Meanwhile, the rupee remains weak due to trade imbalance concerns and continued foreign fund outflows, which is cushioning MCX gold even as COMEX prices consolidate, the LKP analyst said.He sees the current trade as a ‘buy on dips’ opportunity for traders. He lists 5 technical triggers to support his point:

Gold prices have been consolidating in a tight range between Rs 1,20,000 – Rs 1,22,200 for the past several sessions, reflecting indecision after the recent correction. The key resistance levels are placed at Rs 1,22,200 and Rs 1,23,650, while strong support zones are at Rs 1,20,100 – Rs 1,19,350. A decisive break above Rs 1,22,200 could open upside momentum toward Rs 1,23,600 – Rs 1,25,000, whereas a fall below Rs 1,20,000 may trigger renewed selling pressure.

The RSI is currently around 51.7, indicating a neutral to mildly positive bias. The indicator is holding just above the 50 mark, suggesting that buying strength is gradually improving but not yet in a strong momentum phase. Sustained movement above 55 would confirm bullish control.

The bands have narrowed, showing volatility compression. Prices are hovering near the midline, hinting at potential breakout conditions. A close above the upper band (Rs 1,22,200 – Rs 1,22,500) could lead to fresh bullish momentum, while the lower band near Rs 1,20,000 acts as immediate support.

Price action shows consolidation near short-term moving averages. The EMA 8 (Rs 1,21,000) is attempting to cross above EMA 21 (Rs 1,21,100), which, if confirmed, may signal early trend reversal to the upside. Sustaining above both EMAs would reinforce a buy-on-dip strategy.

The MACD histogram is flattening, with the MACD line approaching a potential crossover above the signal line. This indicates momentum loss in the prior downtrend and suggests a base-building phase for an upcoming rebound.

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Gold’s structure remains mildly bullish, with near-term consolidation likely to give way to an upward breakout if Rs 1,22,200 is sustained on a closing basis, Trivedi said.

Entry Zone: Rs 1,20,800 – Rs 1,21,000
Stop Loss: Rs 1,19,500 (closing basis)
Targets: Rs 1,22,500/Rs 1,23,600

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