Gold prices fall for 5th straight day ahead of US Fed decision; check MCX gold support, resistance levels

Indian rupee is also trading below 75 zone, putting downward pressure on MCX prices

Gold prices fell for the fifth straight day on Wednesday, following international trends as investors awaited the US Federal Reserve policy decision. MCX gold June futures were trading Rs 208 or 0.44 per cent down at Rs 47,095 per 10 gram against the previous close of Rs 47,303. Similarly, MCX May futures plunged Rs 812 or 1.18 per cent to Rs 68,146 per kg. In the previous session, silver futures ended at Rs 68,958 per kg. While no major policy changes are expected from the Fed’s two-day policy meeting ending on Wednesday, investors are likely to pay close attention to Chair Jerome Powell’s comments after the meeting. Indian rupee is also strengthening after initial fall, as the uncertainty in rupee value is mainly attributed to the surge in COVID-19 cases and RBI’s unchanged repo rates. “Overall we see gold prices getting bottom support near 46,800 level while resistance will be near 47,600 level, Ajay Kedia, Director, Kedia Advisory, told Financial Express Online.

MCX gold has been witnessing volatility since it touched an all-time high of Rs 56,191 per 10 gram in August 2020. From a record high, MCX gold prices are down Rs 9,096 per 10 gram. The dollar has started to gain grounds ahead of the Fed policy. Indian rupee is also trading below 75 zone, putting downward pressure on MCX prices. The local fatalities are climbing and it will limit Indian rupee from appreciating, supporting the gold prices. “So until Rs 46,500 the crucial support doesn’t break, MCX gold will be elevated, only a fall below that can push prices towards Rs 45,200. However, Rs 48,500 will act as a crucial resistance,” Rahul Gupta, Head of Research, Emkay Global Financial Services, told Financial Express Online.

Globally, spot gold was down 0.5% at $1,767.76 per ounce. US gold futures were down 0.5% at $1,770.00 per ounce. Benchmark U.S. 10-year Treasury yields rose to their highest since April 15, increasing the opportunity cost of holding non-yielding bullion, according to Reuters.

The Federal Reserve is expected to announce its monetary policy decision today evening at 11:30pm (IST), and market players are widely expecting no change in their monetary policy. Some hint of bullish views in the Chairman’s view is expected because the strength of US recovery is undeniable. Jobless claims are at pandemic lows, consumer confidence at a 14-month high, the house price index is soaring, and retail sales rose last week. “US Fed will acknowledge these improvements which should cushion the US Dollar index, thus a correction in gold might be seen,” Rajesh Palviya, Head – Technical & Derivatives Research, Axis Securities Ltd, told Financial Express Online.

Palviya added that technically, gold is facing major pivotal resistance at Rs 48,500. This could push prices towards 45,800 levels ( it may retrace 61.8% of previous rally). From the momentum indicator, the fall in prices are observed with a sharp fall in RSI(14) which implies that the momentum is still up. “We expect a dip then reversal around 45800 zones,” he said.

(The views in this story are expressed by the respective experts of research and brokerage firm. Financial Express Online does not bear any responsibility for their advice. Please consult your investment advisor before investing.)