Sell MCX Gold April futures contract for a target of Rs 57,000 ahead of US Fed, budget

Gold and silver settled on a weaker note in the international markets on Friday. Gold February futures contract settled at $1,928.00 per troy ounce, down by 0.10%, and silver March futures contract was settled at $23.725 per troy ounce, down by 1.23%.

Domestic gold also settled on a weaker note last week. Gold April futures contract settled at Rs 57,279 per 10 grams with a loss of 0.32% and the Silver March futures contract settled at Rs 68,329 per kilogram with a loss of 0.51%.

Gold and silver showed profit-taking last week from their highs as the dollar index recovered from their lows after upbeat US new home sales data.

The US 10-year bond yields also gained and crossed 3.50% ahead of the US Fed policy meetings and pushed gold and silver prices lower.

The US new home sales in December increased by 2.3% to 6,16,000 units against November months sales of 6,02,000 units.

The US unemployment claims also declined last week and the University of Michigan’s yearly inflation expectations for the year came down to 3.9% from the previous estimates of 4.0%.

After upbeat US data, the US Fed could remain hawkish in this week’s policy meeting and could cap gains of precious metals.We expect gold and silver to remain volatile this week ahead of the US Fed policy meeting and the Indian Union Budget on Wednesday.

Gold has support at $1,918-1,910, while resistance at $1,938-1,950 per troy ounce. Silver has support at $23.55-23.20, while resistance is at $24.00-24.34 per troy ounce.

At

, gold has support at Rs 57,080-56,900 and resistance is placed at Rs 57,500-57,680 while silver has support at Rs 67,900-67,550 and resistance is placed at Rs 68,700-69,100.

We suggest selling in gold April futures contract around Rs 57,450 with a stop loss of Rs 57,660 for the target of Rs 57,000.

(The author is Director, Head – Commodity & Currency Research, Finmart)

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