MCX Gold market under long liquidation; Support seen at 29503
Commodity Online | October 17 2016
UPDATED 10:00:16 IST

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Gold on MCX settled down -0.18% at 29656 as the dollar rose after U.S. economic data came in within expectations, cementing assumptions of an interest rate increase by the Federal Reserve by year-end. U.S. retail sales rebounded 0.6 percent in September while producer prices also rose broadly to record their biggest year-on-year increase since December 2014. Federal Reserve Chair Janet Yellen gave a broad review of where the U.S. economic recovery may still fall short. Boston Fed President Eric Rosengren said that investors were probably right in placing "very high" odds on a U.S. interest rate increase in December.

Markets are pricing in around a 70 percent chance that the Fed will move. Demand for gold in India, the world's second-largest consumer, picked up as the festive season began and discounts narrowed, while demand across rest of the Asia continued to improve. Gold traded within a narrow range throughout the week, after falling nearly 5 percent in the previous week. Gold discounts in India narrowed to the smallest level in nearly nine months as prices fell during a key Hindu festival Dussehra boosted retail demand.

Dealers were offering gold at $2 an ounce discounts to official domestic prices this week, the narrowest since the week ending on January 23. Last week discounts were $4. Demand in top-consumer China rose after the week-long National Day holidays and premiums were quoted around $4 an ounce against the international benchmark. Technically market is under long liquidation as market has witnessed drop in open interest by -0.25% to settled at 8235 while prices down -53 rupee, now Gold is getting support at 29503 and below same could see a test of 29349 level, and resistance is now likely to be seen at 29768, a move above could see prices testing 29879.

Trading Ideas:
--Gold trading range for the day is 29349-29879.
--Gold fell as the dollar rose after U.S. economic data came in within expectations cementing assumptions of an interest rate increase by the Federal Reserve by year-end.
--Federal Reserve Chair Janet Yellen gave a broad review of where the U.S. economic recovery may still fall short.
--SPDR gold trust holdings gained by 0.40% i.e. 3.86 tonnes to 965.43 tonnes from 961.57 tonnes.

Courtesy: Kedia Commodities