MCX Gold must reclaim 47000 to stage rally, MCX silver looks bearish on charts; avoid positional long position

September 17, 2021 9:45 AM

Money managers are also losing interest in gold with ETF holdings remaining largely unchanged but we expect their long positions to get unwinded

Gold Rate Today, Gold Price Today in IndiaUnless there is some geopolitical event or a Fed surprise, gold’s trajectory is unlikely to change going into the FOMC meeting

Gold Price Today, Gold Price Outlook, Gold Price Forecast: Gold prices fell as much as $40 on Thursday after better-than-expected US retail sales. If we look at the economy as a whole, the retail sector plays an important part, a good indicator of economic strength. The retail sector due to Covid was fairly non-existent but now with a stronger retail sector could mean a more hawkish Federal Reserve down the road. Although we believe the retail figures will not impact the US Fed’s interest rate announcement next week as the Fed mainly looks at inflation and employment figures. But strong retail sales could suggest that the economy no longer needs Fed support even though unemployment is rising but due to fear of getting infection and so people are voluntarily not opting to go to work and not because there is no work.

Gold’s market sentiment has shifted to negative after yesterday’s economic data which is based on the belief that strong retail sales numbers will strengthen the tapering narrative at this month’s FOMC meeting. Gold was getting top heavy around $1820 as, despite strong fundamental news of weaker-than-expected inflation numbers, gold was failing to sustain at higher levels. Unless there is some geopolitical event or a Fed surprise, gold’s trajectory is unlikely to change going into the FOMC meeting.

At the time of writing, gold has taken support at $1750 and breach below that would slip prices to $1720 and $1700. There’s so much overhead resistance between $1,795-$1,810. Money managers are also losing interest in gold with ETF holdings remaining largely unchanged but we expect their long positions to get unwinded. All eyes will be on Wednesday’s Federal Reserve interest rate meeting and we expect the US Fed to reiterate that they will start their taper program before the end of the year. In MCX, Gold broke its support of 46600 and next support comes at 45500-45000.

Yesterday’s crash has done significant damage to daily charts and gold needs to come back into the range of 47000 if bulls need to stage any comeback. Outlook for gold next week is bearish and unless gold trades above $1800, we are not recommending taking any positional long position. US Fed meeting will also give further direction to the gold market. We might see some short covering and technical bounce back after steep $40 fall which will be good opportunity for intraday traders to take advantage.

Looking at silver chart, it seems that the market is favoring short side trades as a fresh new push lower has been made as silver breached its recent swing low made on 19th Aug. Silver is trading around the support zone of $22.80-$22.55. In MCX, silver is bearish as it is making lower high and lower low on daily chart since mid of May. It has also failed to close above 200 day moving average and at present prices are far from its 20 and 50 day moving average which also suggest that prices are stretched.

Historically prices have come near its moving averages so we are expecting some minor bounce back but overall we are bearish in silver. Break below 45500 will invite fresh shorts till 44500-44000. Next week outlook looks bearish and prices may try to come near its moving average but fundamentals do not support any bullish trend so investors are recommended not to take any high leveraged long positions in Silver.

(Bhavik Patel, Senior Technical Research Analyst, Tradebulls Securities. Views expressed are the author’s own.)

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