Spot Gold prices rose towards $1,020/oz on Monday as a weaker dollar and gained more than 1%. A combination of factors like, weakness in the dollar, a turnaround in oil prices and economic uncertainty favored demand for gold.
The dollar fell on Monday after a meeting of G7 finance ministers in Istanbul brought no surprises. Seasonal physical demand is also supporting gold prices. However, the gold market has now become vulnerable to near-term pullback on the back of record high positions held by speculators.
Dollar’s role as a reserve currency is being questioned in the financial markets. This indicates that financial markets remain highly uncertain. In times like these, demand for the traditional safe-haven investment usually rises. In the near-term we expect the dollar to play a spoilsport and on the back of that gold prices will receive support.
In the currency market, The Euro gained on Monday as economic data coupled with a weakness in the dollar provided support to the currency.
The Euro could receive support on the upside today as the movement in the dollar is expected to be weak. Also investor confidence data could continue to provide a push to the currency. For the day, support is seen at 1.4595/1.4540 whereas resistance is seen at 1.4685/1.4725. The Indian Rupee appreciated on Monday and touched a high of 47.45.
The rise in the currency is mainly on the back of increased dollar selling by exporters amid expectations of fresh capital inflows by foreign funds. For the day, support is seen at 47.15/47.05 whereas resistance is seen at 47.32/47.44.
Gold prices are racing to breach the $1,020/oz mark as a weaker dollar made the yellow metal look attractive for holders of other currencies. Also, strength in crude oil prices too supported the upside.
Gold buying is picking up in India, a top consumer of the precious metal. Traditional buying typically picks up in India during Diwali. We expect the dollar to witness weakness and Gold prices to get support on the upside. Gold prices could breach the $1,020/oz mark.
On intraday basis, Spot Gold prices have immediate support at $1005/$993 whereas resistance is seen at $1022/$1029. Spot Silver prices shall find support at $16.17/$15.80 whereas resistance is seen at $16.80/$17.04.
MCX October Gold has support at 15555/15452 whereas resistance is seen at 15720/15780. MCX Dec Silver shall find support at 25980/25652 whereas resistance is seen at 26685/26800 levels.
