Gold support placed at Rs 59600, resistance at Rs 60500; All eyes on FOMC meeting amid debt crisis

Gold support placed at Rs 59600, resistance at Rs 60500; All eyes on FOMC meeting amid debt crisis

By Bhavik Patel

Gold futures again have climbed above $1950 on optimism of a rate pause during the next upcoming FOMC meet. On Tuesday markets were pricing in a 60% chance of another 25-basis-point hike versus a 40% chance of a pause while on Thursday 70% chance of a pause against a 40% chance of a rate hike. The U-turn came on the back of some of the Fed member’s remarks stating Fed will look into the oncoming economic data before taking further decisions. The latest US manufacturing report revealed a contraction now the seventh consecutive month as new orders continued to drop in the number of new US jobless claims increased slightly last week which is suggesting that the economy is slowing and Fed may pause the rate hikes. Today’s US Non-Farm payroll data will be important as a strong labour market will again increase the chance of a rate hike and subsequently will see a sell-off in gold prices. The US debt ceiling saga is over so the next major trigger for gold is the next FOMC meeting.

Gold in MCX is still looking bullish as momentum oscillator RSI_14 is above 52. Previously we recommended buying on dips around Rs 59200-59000 and this week, gold has bounced from the levels of Rs 59225. Above Rs 60500, gold will witness a breakout till Rs 61200. So immediate resistance is Rs 60500 while immediate support is Rs 59600. One can wait for Non-Farm payroll data to be released and subsequently, any correction around Rs 59600 is the ideal level to go long with an expected target of Rs 60500 and stop-loss of Rs 59200.

(Bhavik Patel is a commodity and currency analyst at Tradebull Securities. Views expressed are the author’s own. Please consult your financial advisor before investing.)