Gold Analysis
Afternoon: Gold Prices Rebound Amid Recession Fears and Middle East Tensions
Highlights:
- Gold rebounded from a four-month low due to US recession fears and Middle East tensions.
- MCX Gold (October Contract) closed with a bearish candle; resistance at ₹70,450/₹70,700/₹71,475 and support at ₹68,600/₹67,940/₹66,500.
- Traders advised to use strict stop-losses due to potential high volatility; consider buying near ₹68,700 with a target of ₹70,450.
Overview:
The gold market witnessed a robust rebound from its four-month low last week, driven by renewed fears of a US recession and rising tensions in the Middle East. The gold futures contract on the Multi Commodity Exchange (MCX) for October 2024 expiry closed at ₹69,792 per 10 grams. Simultaneously, the COMEX gold price ended at $2,486 per troy ounce on Friday after briefly testing the $2,500 mark.
Market Dynamics:
- US Recession Fears: The possibility of a US recession has resurfaced, prompting investors to seek safe-haven assets like gold. Economic indicators have fueled concerns about economic slowdown, reinforcing the appeal of gold as a hedge against market volatility and economic uncertainty.
- Middle East Tensions: Geopolitical instability in the Middle East has also contributed to the increased demand for gold. Tensions in the region often drive investors towards assets perceived as safe, with gold being a preferred choice during times of geopolitical turmoil.
Technical Analysis:
The domestic yellow metal closed with the formation of a bearish candle on the daily chart, indicating that consolidation may continue. Traders should be cautious as the market could experience significant volatility.
Technical Outlook: The short-term trend for gold is expected to remain in a consolidation mode. Traders are advised to trade with strict stop-losses due to the potential for high volatility. The recent formation of a bearish candle suggests that while there may be resistance at higher levels, the support levels could provide some cushion against sharp declines.
Support and Resistance Levels:
