Spot Gold prices ended in the positive territory and rose closer to last week’s record highs above $1,070/oz. The fractured dollar contributed to the upside as the dollar fell to a 14-month low against a basket of six major currencies, helping bullion maintain its appeal as an alternative to currencies.
Record speculative net long futures positions, weak physical demand and scrap hitting the markets as prices hover near record peaks are slowing gold's climb back to highs. Interest rates in the US are expected to remain close to zero levels for the short-term and that indicates that the dollar could continue to weaken. This weakness in the dollar could continue to provide support to gold prices and the trend in gold for the near term remains up.
In the currency market, The Euro rose to fresh 2009 highs and close at the highest level since August 8 of last year. The dollar weakened further as investors fear a sluggish recovery in the US. This factor supported the Euro as a rise in risk appetite led to demand for riskier investment assets.
For the day, support is seen at 1.4875/1.4775 whereas resistance is seen at 1.5025/1.5080. The Indian Rupee erased early gains on Friday after a recovery in the dollar. The gains in the Rupee were also capped as refiners bought the U.S. currency. For the day, support is seen at 46.00/45.90 whereas resistance is seen at 46.30/46.40.
The US Federal Reserve is not expected to raise interest rates at next month’s meeting. Hence, in the short-term the dollar could continue to witness downside. This factor could provide support to gold prices.
At the same time, gold prices may not witness new highs as markets could now become wary of Fed’s interest rate decision. Interest rates may not rise in the immediate meeting but we could see that happening by the year end. Until then the weaker dollar will remain a catalyst to the rise in gold prices.
On intraday basis, Spot Gold prices have immediate support at $1051/$1040 whereas resistance is seen at $1069/$1075. Spot Silver prices shall find support at $17.40/$17.00 whereas resistance is seen at $17.95/$18.20.
MCX October Gold has support at 15795/15740 whereas resistance is seen at 15890/15925. MCX Dec Silver shall find support at 26870/26675 whereas resistance is seen at 27185/27295 levels.
