Gold prices trade flat amid caution ahead of FOMC meet. Is this a buy-on-dip opportunity?

Gold prices opened slightly lower on Monday with the February futures trading at Rs 1,30,401 per 10 grams, down Rs 61 or 0.05% on the Multi Commodity Exchange (MCX). The price action reflects a cautious mood among traders ahead of the U.S. Federal Reserve’s monetary policy meeting this week.

Silver futures also saw pressure in early trade, with the March contract down Rs 1,704 or 0.93%, quoting at Rs 1,81,704 per kilogram. This may be attributed to fluctuating dollar index levels, though underlying fundamentals such as physical delivery shortages and rupee weakness continue to provide support.

On Friday, gold and silver settled on a positive note in the domestic market and on a mixed note in the international markets. Gold February futures contract settled at Rs 1,30,462 per 10 grams with a gain of 0.30% and silver March futures contract settled at Rs 1,83,408 per kilogram with a gain of 2.96%.

Gold and silver are showing very high price volatility ahead of the FOMC monetary policy meetings. The U.S. economic data released last week was mixed, the dollar index slipped to a 1-month low and the high probability of the Fed rate cuts supported prices.

Today, the US Dollar Index, DXY, was hovering near the 98.89 mark, falling 0.10 or 0.10%.

Physical delivery shortages and gains in base metals send silver prices to a record high. Weakness in the rupee supported metal prices in the domestic markets.
“However, gold prices slipped from their high amid a rebound in the U.S. bond yields and a drop in the U.S. unemployment claims. Gold and silver could hold their key support levels of $3,960 per troy ounce and $54.40 per troy ounce, respectively, in the international markets,” said Manoj Kumar Jain of Prithvifinmart Commodity Research.Jain added that he expects gold and silver prices to remain volatile this week amid volatility in the dollar index, volatility in the global financial markets and ahead of the Fed monetary policy meetings

How to trade gold?

Manoj Kumar Jain suggested the following ranges for gold and silver on MCX:

• Gold has support at Rs 1,29,740-1,29,000 and resistance at Rs 1,31,200-1,32,000
• Silver has support at Rs 1,81,800-1,80,000 and resistance at Rs 1,85,500-1,88,000

Jain suggests buying gold on dips around the Rs 1,29,800-1,29,000 range with a stop loss below Rs 1,27,700 for the targets of Rs 1,31,200-1,32,000 and also suggests buying silver on dips around the Rs 1,81,500-1,79,500 range with a stop loss below Rs 1,76,600 for the targets of Rs 1,85,500-1,88,000.

Gold rates in physical markets

Gold Price today in Delhi

Standard gold (22 carat) prices in Delhi stand at Rs 96,784/8 grams while pure gold (24 carat) prices stand at Rs 1,04,104/8 grams.

Gold Price today in Mumbai

Standard gold (22 carat) prices in Mumbai stand at Rs 96,256/8 grams while pure gold (24 carat) prices stand at Rs 1,03,576/8 grams.

Gold Price today in Chennai

Standard gold (22 carat) prices in Chennai are Rs 96,040 per 8 grams, while pure gold (24 carat) prices are Rs 1,03,336 per 8 grams.

Gold Price today in Hyderabad

Standard gold (22 carat) prices in Hyderabad stand at Rs 96,592/8 grams while pure gold (24 carat) prices stand at Rs 1,03,912/8 grams.

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