Gold Price Outlook: Yellow metal on slippery ground; experts give intraday trading strategy, outlook

Gold Price Outlook: Strength in US Dollar Index (DXY) has taken sheen away from the yellow metal. At 107, the DXY is at a two-decade-high levels. Experts estimate weakness in Gold to continue despite fears of recession and Covid19 lockdown in China.   

Ideally, fears of recession should have upped the safe heaven demand and added to gold prices, the last 5-7 years these flows have moved towards USD, Pritam Patnaik, Head - Commodities, HNI and NRI Acquisitions at Axis Securities said. DXY rallied to the highest levels in 20 years leading to a sharp crash in gold prices, he added.

Growing fears of recession is no longer limited to the US alone, as the Germany, Italy and Bank of England also indicated a grim economic outlook, Patnaik said.

Gold prices took a 2 per cent knock down in Tuesday’s session with the US Dollar Index rising to a two decade high, the Axis Securities expert said.

Clearly, a robust Dollar index and buoyant treasury yields have inhibited any bullish sentiments, he pointed adding that the investors must expect gold prices to remain under pressure for some time now.

“Bulls will only return if USD 1845 levels are taken out on the upside,” he suggested.

Gold tumbled over 2 per cent as the US Dollar Index surged to fresh 20-year high on recession fears stoking safe demand, Praveen Singh, Assistant Vice President, Fundamental Currencies and Commodities Analyst at Sharekhan by BNP Paribhas said.

“The 10-year US yields fell nearly 4 per cent as two to five year yields showed inversion, thus raising the possibility of a recession in the US in near-term. US factory orders for June came in at 1.60 per cent, thus topping the forecast of 0.5 per cent, which pressurised gold further,” Singh said.

“Today, the US ten-year yields are up nearly 1 per cent, while the US Dollar Index is trying to break higher to challenge the resistance around 107. Investors would also parse the FOMC minutes of June 9-10 meet for clues to the possible rate hikes by the Federal Reserve. Today’s US ISM services data would also be crucial,” he further said.

The yellow metal is on a slippery ground and is in a danger of testing the support around USD 1750 as the US Dollar Index rallies. The previous support of USD 1785 has become resistance now, the AVP said.

Spot Gold was last trading at USD 1767 at the time of recommendation.

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Intraday Trading Strategy:

At 7 pm on Wednesday, August Gold Futures were trading at Rs 51177 per 10 gram on the MCX and were down by Rs 125 or 0.24 per cent from the Tuesday closing price. Expert Anuj Gupta recommends a Sell on MCX August Gold futures around Rs 51400 with a stop loss of Rs 51800 while the target price of Rs 50500.

Gupta, who is Vice President (VP), Commodity and Currency Research at IIFL Securities sees support for gold futures at Rs 50700- 50300 while resistance at Rs 51400-51800.

Support for international gold is seen at USD 1820-1850, Gupta said.

As for September Silver futures, Gupta suggests Sell at Rs 57500 with a stop loss at Rs 59800 while the target price at Rs 54500. He sees support at Rs 55700-54500 while the resistance at Rs 58000-59800.  

In the international markets, support is seen at USD 18.70-18.20 while resistance at USD 19.80-20.30.

Silver September futures were trading at Rs 56989 and were trading up 56895 and were up by Rs 30 from the last closing price.

(Disclaimer: The views/suggestions/advises expressed here in this article is solely by investment experts. Zee Business suggests its readers to consult with their investment advisers before making any financial decision.)