Market forecast: Major fall expected in gold prices

Written by vivek gupta | Vivek Gupta | New Delhi | Updated: Sep 6 2014, 20:40pm hrs
GoldqFor the coming week 27000/26500 will act as a major support whereas 27600/28100 will act as a major resistance level in MCX Gold October future. (Reuters)
Precious metal: Gold futures fell on Friday, as the European Central Bank's decision to slash interest rates and launch an asset-backed securities and covered bond purchasing program continued to dominate market sentiment. On the other side of Atlantic, the ECB and BOE monthly monetary policy report would be the key. Looking at physical demand side, recent data showed Chinese gold imports from Hong Kong fell by 42% in July with Net imports totalled just 21.1 MT in July. Lower demand from China and continued curb on Indian imports further call for weaker demand-supply dynamics for the commodity over medium-term. Overall looking at the above cues from US economy, the trend in the Dollar index and continued set of subdued demand for the commodity we maintain negative stance in gold and recommend selling on higher next week.

Over all, MCX Gold October future is in bearish trend and sustaining around lower levels. So for the coming week, we are expecting major down fall from higher levels. For the coming week 27000/26500 will act as a major support whereas 27600/28100 will act as a major resistance level in MCX Gold October future. For the next week in MCX Gold, trader can use sell on higher level strategy, if MCX Gold October future sustains below the levels of 27200 then it could test the levels 27200/27000.

Technically, MCX Silver December futures is in bearish trend and sustaining around lower level from last couple of the week. For the coming week 43000/44500 will act as a major resistance levels where as 39000/37700 will act as major support in MCX Silver December futures. For the next week in MCX Silver futures, traders can use sell on higher level strategy, if MCX Silver December futures sustains below 41500 then it could test the levels of 40500/39000.

Energy: Crude oil prices rebounded slightly in Asia early Friday, but remain under pressure from a stronger dollar and ample supplies. Overnight, oil prices came off session lows but stuck well into negative territory after weekly data revealed U.S. crude and fuel stockpiles were more abundant than expected last week, stoking concerns of a supply glut. We expect crude oil prices to remain in range for the week as stronger dollar and sufficient supplies can keep the prices in range.

For the coming week 5600/5350 will act as major supports levels whereas 6080/6200 will act as major resistance in MCX Crude oil September futures. For the next week, trader can use buy on lower level strategy, if MCX Crude September future sustain above 5750 levels then it could test the levels 5850/6000.

Base Metal: "Copper prices are falling as investors expect US nonfarm payroll to be robust which may force Fed to revise its policy stance on rate hike," European Central Bank President Mario Draghi will later today announce the bank's monetary policy meet outcome with investors expecting more stimulus measures including a rate cut or announcement of additional bond purchases. Draghi and French President Francois Hollande shared same concerns on growth and subdued inflation in 18-nation economy. Industrial metal were also supported on falling inventories on the London Metal Exchange (LME) indicating tight supply situation and strong growth domestic product data of United States.

Trend of MCX Copper November future is in consolidation and also sustaining in range. For the coming week, it could face major resistance of 433/447 whereas 400/387 could be a major support in MCX Copper. For the next week trader may follow sell on higher levels strategy, if MCX Copper November future sustain below 423levels then it could test the level of 412/402.