Gold Prices plunges on MCX amid increase in US employment - know why; get outlook on yellow metal

Robust US employment numbers dented the prospects of Gold on Monday. On the MCX, June Gold Futures were trading at Rs 51570 per 10 gm down by almost Rs 36 from the Friday closing price around 5 pm.

To understand whether gold traders should start selling or hold their positions, Zee Business’ Commodity Editor Mritunjay Jha brings this report The employment report released last week in the US has shown positive outcomes. The predicted unemployment rate by US Fed was around 4 per cent, but now it is reported as 2 per cent, which shows that the employment rates are moving in a positive direction. 

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Despite the current weakness, it is not advisable to sell gold as of now, Sugandha Sachdeva, Commodities and Currency Market Expert said. The gold has strong support even at current levels of Rs 51,500 as per Sachdeva. She gave a contrarian bet of buying levels at Rs 51220, with a stop loss at Rs 51000 and a target of Rs 51580.

Agreeing with Sachdeva, another expert recommended a buying price of Rs 51400, with a Stop loss of Rs 51,200, and a target price of Rs 51600.

Positional Trade

Kishore Narne of Motilal Oswal Financial Services said that the inflation impact in gold is priced in now. The gas rates will also rise, and the US Fed will increase the interest rate by 50 bps. Contradicting the other two experts, Narne said that he thinks gold has the potential of moving negatively up to 10 per cent to 15 per cent. Gold will remain a range-bound market, as it will trade between 1700 USD and 2000 USD, i.e. a range of 300 USD.

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