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India’s spot gold prices are likely to stay weak on Wednesday on the back of global weakness in prices and in the absence of a trigger for physical demand in local market.
For India’s spot gold, India Bullion and Jewellers Association (IBJA) reported Tuesday’s PM rates at Rs 37,954 per 10 grams (for 999 purity without tax). However, the rates are lowest since October 1, 2019 when the yellow metal was quoted at Rs 37,375. Since then, the spot gold prices have hovered above Rs 38,000 level.
Downward pressure
This, according to analysts, indicates the breach of an important psychological support level, which may lead to further weakening in prices owing to international economic and trade factors, along with domestic weakness in physical demand.
Gold December futures on MCX quoted negative in opening trades on Wednesday at Rs 37, 694 for 10 grams, down 69 points from the previous close. International gold was quoted at $1459 an oz, down by $1.3 over Tuesday’s closing.
Kedia Advisory in its bullion report pointed to limited upside possibilities for gold with strong resistance at Rs 37,875, while prices can touch a lower level of Rs 37,500.
“Gold price approached our waited target at $ 1447 and shows bullish bias to test the correctional bearish channel’s resistance, noticing that stochastic loses its positive momentum to approach the overbought areas, which supports the chances of resuming the expected bearish trend for the upcoming period, which depends on the price stability below $1489, while its extended target located at $1413.10,” Kedia said in its report.
Stiff headwinds
Commenting on the gold price outlook, Aasif Hirani, Director, Tradebulls Securities, said the safe-haven metals are facing stiff headwinds amid scant risk aversion in the global marketplace at present.
“December Gold Future in COMEX recovered from lows of $1450 to $1462 and finally settling at $1459. In MCX, gold opened lower, thanks to strong rupee. Gold on November 27 opened -28 points and is struggling to find a bottom,” he said. , “We expect gold to make short-term bottom around Rs 37,500 while Rs 38,300 still proves to be stiff resistance. Looking how hot equity market is, we expect gold to stage a short-term comeback.”
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