Commodity Radar: Gold slips as trade optimism grows; Fed in focus. Sell on rise, says expert
Gold traded range-bound in the initial trade on Monday, though the bias was positive as investors await the Federal Reserve‘s outcome on Wednesday, though the trade deal optimism dampened the gold appeal. The US has secured trade agreements with Japan and the EU ahead of the tariff pause deadline, which ends on August 1.
The August gold futures were trading at Rs 98,040, up by Rs 221 or 0.23% over the Friday closing price. On the COMEX, the yellow metal prices were hovering around $3,341.40 per troy ounce, gaining $5.80 or 0.17%.
“This optimism is driving safe-haven unwinding. Real yield outlook also supports a dollar-positive environment, hurting non-yielding assets like gold. Additionally, the rising US Dollar Index (DXY)is negative for global gold, which is evident amid profit booking around Rs 100K levels,” Jateen Trivedi, Vice President, Research Analyst – Commodity and Currency at LKP Securities, said.
A slew of economic data, along with the Federal Reserve rate-setting committee’s outcome on Wednesday, will be key triggers for the gold price movement.
Among the domestic factors will be the rupee movement, whose outlook remains volatile with a weak bias, says Trivedi. “Despite some tariff resolution efforts, India remains uncertain in upcoming trade talks. Rupee weakness could cushion MCX Gold slightly against COMEX declines, but not enough to reverse the broader downtrend unless geopolitical surprises reappear,” he said.
Among the technical factors, these 5 factors will give traders tips for making trades:
1) Key support & resistance
Gold has entered a near-term corrective phase, sliding steadily from Rs 1,01,000+ levels to the current support region near Rs 97,800–Rs 97,400. Price action indicates weakness with multiple red candles and no strong bounce from support, suggesting bearish sentiment in the short term.
— Immediate resistance: Rs 98,675
— Key resistance: Rs 98,961 – Rs 99,385
Support:
— Immediate support at Rs 97,400
— Swing base at Rs 96,100
— Rs 94,500 → major support from May low
Price needs to reclaim Rs 98,300 – Rs 98,675 to negate the bearish momentum.
2) RSI (14): 30.54
RSI has dropped into the oversold region near 30. This is the lowest reading since early April, suggesting selling exhaustion may be nearing. However, a bounce confirmation is awaited for reversal validation.
3) Bollinger bands
Price is now hugging the lower Bollinger band, clearly in a downward squeeze. The expanding lower band with price riding it downward indicates momentum-driven decline. Any pullback toward the mid-band (Rs 98,600) will face resistance unless volume expands on the upside.
4) Moving averages
— EMA 8 (Red): Below EMA 21
— EMA 21 (Yellow): Now acting as resistance near Rs 98,600
Price has stayed below both EMAs for the past 5 sessions, confirming a bearish structure. The gap between the EMAs is widening, indicating increasing selling pressure.
5) MACD
MACD is deeply negative (–222) and still diverging below the signal line. No signs of convergence yet, meaning bearish momentum is active. The histogram remains negative, further confirming weakness.
Trading strategy
Trivedi recommends a ‘Sell on rise’ strategy in the range of Rs 98,000 to Rs 98,300. The stop loss is placed at Rs 99,550 on a closing basis. The targets are Rs 97,400/ Rs 96,100 and Rs 94,500 (if US data beats expectations and dollar rallies).
Only a breakout and close above Rs 99,550 would negate this bearish view.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)