Indian Rupee holds key to MCX Gold movements; futures may consolidate gains

11 Jun

“Gold may see consolidation of gains registered on Monday; but weakening of Rupee against Dollar may see the futures scale up further, if the same occurs,” said John Godson, Technical Analyst with Commodity Online.

Movements in Indian Rupee are expected to impact MCX gold futures for the day even as analyst suggest that the commodity may consolidate gains of yesterday.

Rupee was seen trading at 58.871 against Dollar as of 11.36 AM IST. Gold futures on India’s MCX was seen trading up by 0.85% at Rs.28245 on 11.12 am IST. The commodity as of the time mentioned has maintained the range of 28041-28261.

“Gold may see consolidation of gains registered on Monday; but weakening of Rupee against Dollar may see the futures scale up further, if the same occurs,” said John Godson, Technical Analyst with Commodity Online. The weakness in Rupee may let gold on MCX appreciate despite a lack of bullishness in Comex gold, he pointed out.

He also provides support and resistance for the yellow metal.

Support for the commodity: 27900, 27700
Resistance for the commodity: 28300, 28325

Meanwhile, on the Globex platform of Comex, gold for delivery on August 13 was seen trading at $1,383.25/oz, a loss of $2.75 or 0.20% as of 11.30 AM IST.

Gold trading tips

Also, as fiscal risks start to retreat, S&P altered the U.S.’s AA+ credit rating outlook to stable from negative. Besides holdings in SPDR Gold Trust climbed on Monday for the first time since May 29.

The US economy meanwhile, added 175000 jobs in May compared to just 149000 in April, reports from last week said. US unemployment rate meanwhile climbed to 7.6% for the month and private non-farm pay rolls expanded just by 178000 compared to the forecast of 180000 in May.

Barclays notes that while the job data is signalling that “labour markets are improving at a moderate pace” it is “not decisive” in itself.

This means investors would be latched to uncertainty as they try to gleam from the data if or not the US Federal Reserve would phase out QE measures.

Barclays also expects the European Central Bank to keep the interest rates unchanged till the end of this year.

Since inflation rates in emerging markets have surprised to the downside, Barclays thinks that the monetary policy of these nations may continue to remain accommodative.

If the second and third expectations of Barclays are anything to go by, then investors can assume that futures of gold may find some support, though it may not be of on a significant scale if one is allowed to think of the days ahead.

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