Will Gold futures regain its lost Ground?

By Prijath Babu

After the price avalanche in February 29, Indian gold futures were consolidating with negative bias for last two weeks. A firm dollar increases the liquidation pressure in the gold. And at present US economy was on its path towards recovery. US Job data shows positive remark on US economy and 200000 job creation for third straight month gives more  relief to US Economy. At present US economy is not in dire need of further monetary stimulus measures and investors are more eagerly waiting outcome from Fed reserve meeting.

After two days profit booking, dollar Index continued it rally against the basket of six foreign currencies. At present dollar index is trading near 80.102 appreciating 2.60 percent for the last eight days. Euro quoted near 1.30879 fell approximately 3 percent for the same period.  The debt swap might be short lived since Greece is facing the recessionary pressure and unpredictable elections. Political instability at this time can add the worries the euro zone recovery.

International spot gold currently priced at 1703.10 levels, and prices showed slight weakness after three days of recovery moves. At present 1715 acts as the immediate resistance followed by 1726 and 1735 levels. Prices have to sustain above 1695 levels to strengthen the recovery moves. However 1682 will as crucial support which is also 61.80 retracement of the continuing recovery move. From technical perspective below 1695 onwards liquidation pressure can revert into the counter, even though retracement support at 1682 can alive the chances of a pullback rally. Direct fall below 1682 can erode the technical significance of the pull back wave with next support at 1674 and 1662 levels.

Technical Outlook for the week ( Apr Contract)

From Indian perspective any move above 28090 can only further strengthen the chances of a pullback rally which posted strong recovery on Friday from 27580 levels. Strong upside breakout from this level can trigger pull back rally towards 28270/28430 levels. However analyst bias is give more preference to the underlying weak trend in the counter and any trade below 27970 can increase the liquidation pressure with possible support levels at 27730/27580 levels.

The author is a market expert and can be contacted prijath@gmail.com