Gold rebounded after a heavy pounding yesterday prompted by Goldman Sachs cuting gold price forecast, Fed minutes and reports of Cyprus selling Gold worth 400 milllion euros to fund its bailout. Investment bank Goldman Sachs demoted gold's average price for the year 2013 to USD1545, down from its earlier forecast of USD1610, downgrading probable price of the yellow metal for second time in less than two months. Reports of Cyprus planning to sell part of their gold reserve worth 400 million euros, approximately 10 tonnes to finance country's bailout raised concerns over increased supply of gold available in the market. Mixed signals from the Federal Reserve meeting over the duration of bond buying program also weighed on prices. Earlier, disappointing US jobs data had raised expectations that the US Federal Reserve will continue the bullion friendly bond buying program and had lifted prices out of the doldrums last week. Usually central bank money printing to buy assets possibly fuel inflation and support bullion. At the same time, growing optimism that Chinese economy would avoid a hard landing, the Bank of Japan's bold monetary stimulus and mounting tensions on the Korean peninsula are likely to trigger buying interest in the commodity again.
After facing stiff resistance near USD1588-1590 regions prices drifted lower towards the lower end of Bollinger Band support of USD1550. As per the prevailing chart formation, prices likely to trade choppy but further downside is expected only on a break below USD1537 with stiff volume. Fall below the same, next sizable move is expected towards USD1520, clearing of which is mandatory for further liquidation towards USD1480/48 levels. Conversely, inability to surpass USD1537, corrective rallies is expected but a turnaround point is seen above USD1590. On a very short, consolidation inside USD1590-1550 is expected in the immediate run but breaking any of the sides would suggest fresh directional moves. RSI is placed at neutral zone while the volumes are steady.
Trading strategies:
Key levels for the day: Downside: Immediate 1537/1520/1480 followed by 1448.
Upside Immediate: 1568/1585-1590 regions/1600/1607/1618/ then1660
Buy above 1590 target 1607 SL below 1578. Buy near 1547 target 1577 SL below1535
Buy above 1609 target 1620 SL below 1598.
Sell on pullbacks to 1585 target 1565 SL above 1596
Sell below 1537 target 1520 SL 1553. Sell below 1518 target 1480 SL above 1554
Expect a choppy trading initially, but breaking any of the key levels of 1537-1590 regions would be required suggesting fresh directional moves.
MCX May: Intraday Levels are: Resistance seen at: 29050/29180/29360/29530/29640
Supports: 28880/28810/28700/28510/28320/28000
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Buy Gold above USD 1590; target USD 1607: Geojit
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