Spot Gold: Strong support $920-925, Silver $13.70

MAJOR HIGHLIGHTS

The world economy is forecast to contract 2.9 percent this year, compared with a prior estimate of a 1.7 percent decline, as per latest report of the World Bank.

India’s inflation turned negative for the 1st time since 1977 during the 1st week of June. WPI declined by 1.61% in the week ended 6th June from a year earlier.

MARKET RECAP

The Bullion pack traded sideways during last week as the major currencies too witnessed sideways to choppy trading. The US data releases last week such as the Leading Indicators May data, Core CPI & Actual CPI were positive for the USD. In spite of that, the USD was unable to rally on expectations that this week, Federal Reserve policy statement will suppress any speculation that US interest rates will be raised anytime soon this year which would have an important bearing on the bullion price direction. Rising crude prices, increasing money supply in the global financial system along with signs of improvement in global economic scenario has raised inflationary concerns which are overall supportive for the bullion pack. Globally, ETF & fabrication demand has slowed down over the past few weeks.

In the currency market, the Euro traded sideways against the USD last week, losing slightly to end the week below 1.4000. The Euro continues to close above its 200-day Moving Average indicating its overall strength. It is also closing above its 10-Week as well as 30-week EMA respectively. For the day, resistance is seen at 1.4054/1.4178 whereas support is seen at 1.3845/1.3721. The Rupee weakened sharply against the USD during last week's trading session, losing 0.63 to end the week above the 48 mark. Recent low of 46.58 shall act as a short-term bottom. On the upside, the Rupee has closed above its 200-day Moving Average (48.03) for past 3 consecutive days. For the day, resistance is seen at 48.60/48.85 whereas support is seen at 48.00/47.75.

OUTLOOK

The bullion pack has declined for the past fortnight with short-term trend for both, gold & silver remain down as prices continue to close below its 10-Day EMA which is sloping downwards. Spot gold continues to be very strongly supported around $920 - $925 zone. As major currencies also are trading sideways and with Gold-USD negative correlation very much in place currently, the US Dollar holds the key for further price direction. From a long-term perspective, the overall secular uptrend of Gold remains intact. Global inflationary concerns shall continue to benefit gold, a safe-haven & hedge against inflation. Silver, being a byproduct of base metals, is being driven by investment demand on one hand & base metal prices on the other.

On intraday basis, Spot Gold prices have immediate support at $927/$920 whereas resistance is seen at $940/$948. Spot Silver prices shall find support at $143.95/$13.70 whereas resistance is seen at $14.25/$14.45.

MCX August Gold has support at 14420/14345 whereas resistance is seen at 14620/14730. MCX July Silver shall find support at 22460/22270 whereas resistance is seen at 22695/22885 levels.

Courtesy: Angel Commodities

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