The February gold futures in India eased on January 22, tracking some weakness in international prices as the dollar gained strength with investors assessing the risk of a global epidemic from a coronavirus outbreak in China.
The death toll from the Wuhan coronavirus in China rose to nine and the United States reported its first case, sending markets tumbling on fears of economic damage as tourists cancelled travel plans and airports stepped up screening, a Reuters report said.
Weighing on gold, the dollar firmed against a basket of currencies, making the yellow metal more expensive for holders of other currencies, it said.
On the MCX, gold contracts for February were trading lower by 136, or 0.34 percent, at Rs 39,775 per 10 gram at 0930 hours.
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Experts say that investors should use dips to buy, as the yellow metal is likely to remain volatile but should trade in Rs 37,700-40,000 range.
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Trading strategy
We expect precious metals to remain volatile following the outcome of World Economic Forum discussions (WEF), volatility in the dollar index and global equities.
Gold prices are expected to trade in the range of Rs 39,700-40,100 and silver prices in the Rs 45,800-46,600 range.
Expert: Jateen Trivedi, Sr Research Analyst – Commodity & Currency, LKP Securities Ltd
On the daily chart, gold traded volatile and ended on a weak note on January 21, with US economic growth in midst of boost-up, as US President Donald Trump said at WEF Davos 2020. The Wuhan virus outbreak, however, supported the gold prices as an epidemic can weaken tourist visits and dampen growth.
The RSI & MACD are signalling strength but some weakness can continue till the gold keeps trading below Rs 40,000. For the day, Rs 40,000-40,200 will act as resistance, whereas Rs 39,800-Rs 39,650 as supports.
Expert: Pritam Kumar Patnaik, Head Commodities, Reliance Commodities
MCX gold February futures had a volatile session on January 21 but then managed to bounce back from Rs 39,675.
However, the bullish momentum may continue if it sustains above Rs 39,960. On the hourly chart, gold sustained 50-Hourly Moving Average, where Rs 39,650 will act as strong support.
International gold can trade in the $1,545-1,564 range.
Expert: Hareesh V, Head Commodity Research, Geojit Financial Services
A steady dollar and concerns over demand expectations from the top consumer China are likely to weigh down the sentiments. However, tensions in the Middle East and an outbreak of new coronavirus in China, may perhaps offer lower-level support to prices.
Prices need to break the immediate and strong support of $1,535 to extend the selling momentum. Else, expect a choppy trade inside $1,535-1,565 levels for the day.
Intraday strategy
MCX gold February buy in the range of Rs 39,860-39820, with Rs 39,710 as stop loss and a target of Rs 40,000 levels.
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Source: Money Control
