Indian gold investors need to watch out for the rupee. Any strength in the rupee that follows dollar weakness may wipe off gold price gains.

Recovering from 61.5 against the dollar on Wednesday, rupee touched 60.9 and closed at 61.3, last week. The IMF had increased its 2014-15 growth forecast for India to 5.6 per cent from 5.4 per cent earlier.

However, technically, rupee appears set to stay flat in the short-term. So, gold investors may actually make some returns related to international gold price movements.

Last week, MCX gold closed at ₹26,964 after hitting a high of ₹27,048 on Friday.

For the week, however, the contract registered a gain of only 1.6 per cent, with rupee hitting 60.9 intra-day on Thursday.

MCX Silver closed at ₹38,512, up 1.6 per cent for the week. The metal had hit a high of ₹39,144 on Tuesday, but had later given up the gains on rupee’s appreciation.

Levels MCX gold is having a strong resistance at ₹27,000 level. If this is cut in the coming days, the contract can move higher to ₹27,135 and ₹27,500. This will be easily achievable if rupee stays flat. On the downside, the target will be ₹26,500 and ₹26,050. MCX Silver’s smart rally last week has opened possibilities of an upside for the contract in the coming days.

Levels of ₹39,000 and ₹39,600 can be seen this week.

However, for this, the contract has to first break the resistance in the zone of ₹38,500-38,600.

On the lower side, the support is at ₹37,900 to a target of ₹37,200.

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