Commodity radar: Gold rate falls Rs 1,300/10 gram. 4 reasons why this dip is a buying opportunity

Domestic gold prices fell sharply on Monday, falling by Rs 1,300 per 10 grams, or almost 1%, on the back of international prices. The breather came as traders booked profits after last week’s rally, which saw the yellow metal consistently hit record highs. The February gold futures on the MCX were trading at Rs 1,38,555. The yellow metal futures hit a new lifetime high of Rs 1,40,465 on Friday.Prices on the international market also fell below $4,500 an ounce after reaching the milestone last week. They were trading around $4,496.40, down $56.30 or 1.24% from Friday’s price.

Jateen Trivedi, Vice President – Research Analyst at LKP Securities said gold continues to trade in a structurally bullish zone. While momentum indicators suggest near-term consolidation is possible, the broader trend favors buying on declines rather than selling on surges, he said.

Although the INR has fallen today, the rate has regained some strength from its lifetime low of 91 per dollar. The rupee fell 5 paise to 89.95 against the US dollar in early trade on Monday, PTI reported.
“The relative strength of the rupee is causing MCX gold to be slightly weaker compared to COMEX prices. However, this impact remains marginal as global gold sentiment remains strong. Any renewed rupee weakness could quickly translate into sharper upside potential for MCX gold.”

Technical view

1) Major support and resistance

“Gold remains in a strong uptrend and is trading near the upper end of its recent range after a sharp rally. The price has held comfortably above the breakout zone of Rs 1,31,500-Rs 1,32,000 and continues to form higher highs and higher lows on the daily chart. The consolidation near the highs indicates strength rather than distribution, indicating that the trend remains intact,” Trivedi said.An immediate support is seen at Rs 1,34,500 while a major support is at Rs 1,32,500, he said, while immediate resistance is placed at Rs 1,36,000 while the next hurdle is at Rs 1,37,000.

As long as prices remain above Rs 1,32,500 on a closing basis, the broader bullish structure remains undisturbed.

2) RSI (14)

The RSI is hovering around 73, reflecting strong bullish momentum. Although the indicator is in the overbought territory, it has not shown any major bearish divergence so far. This suggests momentum remains positive, although occasional consolidation or shallow dips are likely before the next leg higher.

3) Bollinger bands

Gold is trading close to the upper Bollinger band, with the bands expanding, generally indicating trend continuation. No significant mean-reversion signal is visible yet and the price remains well supported above the mid-band, reinforcing the buy-on-dips structure.

4) moving averages

EMA 8 & EMA 21 – Dynamic support

— EMA 8: Nearly Rs 1,34,800

— EMA 21: Nearly Rs 1,33,400

Both EMAs slope upwards and act as dynamic support zones. Any pullback toward these averages will likely generate buying interest, keeping the short-term trend positive.

5) MACD

MACD remains in positive territory, with the signal line above zero and the histogram in the green zone. Momentum indicators continue to support the prevailing uptrend, with no immediate sign of a trend reversal.

Gold trading strategy: buying on dips

— Buy zone: Rs 1,34,500

— Stop Loss (Closing Basis): Less than Rs 1,32,500

— Targets: Rs 1,36,000/Rs 1,37,000

(Disclaimer: The recommendations, suggestions, views and opinions expressed by the experts are their own. These do not represent the views of The Economic Times.)