C O : Gold leaves all other Precious Metals behind
Spot Gold prices touched a high of $1,070/oz yesterday, taking cues from a fractured dollar. In the near-term the dollar could continue to remain on the weaker side and that could help gold prices test new record highs.
A weaker dollar is fuelling buying of the yellow metal as an alternative investment. Though economic data points towards recovery, we feel that there is still some caution and uncertainty in the air which is leading to investors looking at gold as a safe-haven investment.
The recovery from the deep economic crisis has been fast because of the stimulus measures backed by governments. Hence, it may not be sustainable in the long-term. Thereby investment in gold as a traditional form has risen in the last few weeks.
In the currency market, The Euro gained in yesterday’s trading session as strong economic data pointed towards a healthy recovery. Industrial production in the Eurozone rose for a fourth month in August by 0.9% from July. The positive data led the Euro higher against the dollar.
For the day, support is seen at 1.4865/1.4795 whereas resistance is seen at 1.4975/1.500. The Indian Rupee gained sharply on Wednesday and touched a high of 46.05 yesterday. The gains in the currency were backed by expectations of more capital inflows after equity markets rose to 17-month highs.
A weaker dollar in the global markets also provided upside support. For the day, support is seen at 45.80/46.70 whereas resistance is seen at 45.95/46.10.
The fractured state of the dollar could continue to provide support the gold prices. In the near-term, gold prices could test levels between $1,080 - $1,095/oz. But profit-booking at higher levels is inevitable as prices have raced higher very fast.
We expect the dollar to remain weak and inflation worries too are expected to raise the value of gold as an investment hedge.
On intraday basis, Spot Gold prices have immediate support at $1055/$1046 whereas resistance is seen at $1070/$1078. Spot Silver prices shall find support at $17.65/$17.45 whereas resistance is seen at $18.05/$18.30.
MCX October Gold has support at 15840/15765 whereas resistance is seen at 16010/16110. MCX Dec Silver shall find support at 27185/26995 whereas resistance is seen at 27615/27855 levels.
