MCX gold prices trade near 20, 50 DMAs, range bound movement likely next week; support at Rs 50,000

MCX gold prices trade near 20, 50 DMAs, range bound movement likely next week; support at Rs 50,000

By Bhavik Patel

Gold prices have remained steady this week after taking support at $1800. Gold showed no significant or lasting reaction to a weaker-than-expected revision to U.S. first-quarter GDP which came in down 1.5%, year-on-year. There has been weak US and Chinese economic data this week, particularly the U.S. housing market which continues to see significantly slowing momentum as the number of consumers who are starting the process of buying a home fell dramatically in April. Pending Home Sales Index fell to 99.3 in April, down 3.9% from March. The gold market is starting to see some new bullish momentum as the latest housing market data is the latest in disappointing news.

We are neutral next week in Gold and we might see some headwinds coming as the US Fed’s next meeting comes near. The US Fed has the next FOMC meet on 8-9th June and another 50 bps rate hike is on the cards. So in USD and Treasury yields we will see some more up move. Gold has been resilient so far as it has not breached $1800 but below that would open doors till $1765 and $1750. There aren’t any strong fundamentals to shoot prices up but there aren’t any strong fundamentals to break down the prices either. That is why gold is stuck in range and next week would not be any different. In MCX, Gold prices are trading around the 20-day and 50-day moving average. RSI_14 is at 49 which again reiterates the neutral stance. 51500 is the immediate resistance while 50000 seems to be immediate support. Range bound movement is expected next week and any fresh positions could be taken after the prices break the range of 50000-51500.

(Bhavik Patel is a commodity and currency analyst at Tradebulls Securities. Views expressed are the author’s own. Please consult your financial advisor before investing.)