MCX Settled Up 0.18% At 28629 - Gold

On MCX settled up 0.18% at 28629 on short covering moving prices further away from their lowest level in around five weeks as recent selling pressure tied to bets on another US interest rate hike this year faded. Investors continued to evaluate the possibility of another rate hike from the Fed later this year in the wake of mixed messages from policymakers in recent days. 

Last week, the U.S. central bank raised interest rates for the second time this year and maintained plans to go ahead with another rate hike by year-end. Despite the Fed's relatively hawkish message, market players remained doubtful over the central bank's ability to raise rates as much as it would like in the coming months due to a recent run of disappointing US economic data and indications of weak inflation.

Futures traders are pricing in less than a 15% chance of a hike at the Fed's Sept meeting, odds of a Dec increase was seen at about 35%. Sentiments remain firm as support seen after the report that Gold may be in a longer-term bullish trend signaled by the formation of a rare golden cross in December, according to Ned Naylor-Leyland, manager of the Old Mutual Gold & Silver Fund. That’s when the 50-week average moved above the 200-week gauge, and the previous time it happened was in 2002. 

When the opposite happens, it’s known as a death cross and considered bearish. Every time they’ve crossed in the past 30 years, it foreshadowed a broad price move that lasted at least three years in gold and real bond yields. Technically market is getting support at 28583 and below same could see a test of 28537 level, And resistance is now likely to be seen at 28712, a move above could see prices testing 28795.

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Suhani Verma

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