Spot Gold prices closed below $1,060/oz yesterday as a bounce back in the dollar put pressure on the yellow metal. A stronger dollar makes dollar-denominated commodities look expensive for holders of other currencies. The dollar rebounded from its weakest level in 14-months, clipping interest in the metal as a hedge against the falling US currency. The recent rise in gold prices is mainly backed by the dollar’s fractured state. Yesterday’s housing data did not come on the positive side and that led to risk aversion and thereby demand for the dollar. However, the overall trend in the dollar for the near-term remains down as interest rates in the US is not expected to rise soon. Until, then the dollar may not look attractive from an investment perspective. The dollar is expected to trade with a negative bias and this factor will provide support to prices. But we do not expect gold prices to make fresh highs as the gains in the past few days have been sharp. In the currency market, The Euro fell against the dollar in yesterday’s trading session as a bounce back in the Greenback limited gains in the currency. For the day, support is seen at 1.4880/1.4825 whereas resistance is seen at 1.4990/1.5040. The Indian Rupee appreciated on Tuesday and touched a high of 45.85 on the back of a weakness in the dollar but dollar demand from importers capped the gains in the currency. For the day, support is seen at 45.90/45.80 whereas resistance is seen at 46.20/46.30. 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. Gold prices could come under pressure today if the dollar maintains strength. Though the yellow metal has support in the form of overall weakness in the currency, even slight strength in the dollar could add to selling pressure. On intraday basis, Spot Gold prices have immediate support at $1048/$1041 whereas resistance is seen at $1064/$1074. Spot Silver prices shall find support at $17.25/$17.05 whereas resistance is seen at $17.80/$18.15. MCX October Gold has support at 15850/15790 whereas resistance is seen at 15970/16000. MCX Dec Silver shall find support at 26930/26750 whereas resistance is seen at 27300/27500 levels.

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