Gold and Silver - July 17, 2021 - Reliance Securities
(Time Zone: UTC)
Mr. Sriram Iyer, Senior Research Analyst at Reliance Securities
International and domestic gold is on the way for 4th consecutive weekly gains after U.S. Federal Reserve Chair Jerome Powell reassured investors that the central bank would continue its accommodative monetary policy despite a spike in inflation readings.
Powell, in prepared remarks before a congressional hearing, said the U.S. job market is still ways off from the progress the Fed wants to see before reducing its support for the economy.
The dollar turned lower after the statement and lent support.
Investors also cheered comments by European Central Bank (ECB) officials that the central bank would not tighten too early.
On the data front, the June U.S. inflation print this week topped all forecasts and pointed to higher costs associated with the reopening from the pandemic.
The 10-year U.S. Treasury yield retreated below 1.4% after the data this week and lent support.
Back home, data showed Indian demand for the yellow metal has improved slightly after gold imports increased to $969.87 million in June, from $608.69 million a year earlier. It stood at $679.16 million in the previous month.
Gold and silver could continue to move higher supported by the dovish Fed.
Rise in Delta variant across certain countries could prompt investors to move towards the safety of gold and silver.
Therefore, any dip in the markets will be a buying opportunity. However, some profit taking cannot be ruled out.
So, wait for the right prices and make an entry at lower levels.
On the economic calendar front, the key trigger could come from the European Central Bank Monetary Policy Meeting.
Recent statements from the officials suggest that they will continue to remain dovish, which will continue to remain supportive to prices.
On the charts, immediate hurdle is at $1840 levels and will require a sustained and weekly close above the level to move further up. A break above will push prices very quickly to $1870-1895 levels. However, a trade below will pull prices back to $1800 levels.
On the domestic front, immediate hurdle is at Rs.48780 levels and will require a sustained and weekly close above the level to move further up. A break above will push prices very quickly to Rs.49400-49500 levels. Supports are at Rs.47850 and 47200.
In other precious metals, on the charts, LBMA Silver holds a 21-Daily Moving Average near $26.00 level where breakout above $26.35 could take prices above $26.60-$27.88 levels. Support is at $25.80-$24.40 levels.
MCX Silver September is trading above 100-DMA which is placed at 68750 above which could see 70200-72500 levels. Support is at 68700-66600 levels.
Strategy: - Gold August: - Buy on dips near 48000 with a stoploss at 47800 and a target at 48500.
Strategy: - Silver September: - Buy on dips near 68700 with a stoploss at 67500 and a target at 71000.
Disclaimer: The recommendations, if any, made herein are expression of views and/or opinions and should not be deemed or construed to be neither advice for the purpose of purchase or sale of any security, derivatives or any other security through RSL nor any solicitation or offering of any investment /trading opportunity on behalf of the issuer(s) of the respective security(ies) referred to herein. These information / opinions / views are not meant to serve as a professional investment guide for the readers. No action is solicited based upon the information provided herein. Recipients should rely on information/data arising out of their own investigations. Readers are advised to seek independent professional advice and arrive at an informed trading/investment decision before executing any trades or making any investments. While due care has been taken to ensure that the disclosures and opinions given are fair and reasonable, none of the directors, employees, affiliates or representatives of RSL shall be liable for any direct, indirect, special, incidental, consequential, punitive or exemplary damages, including lost profits arising in any way whatsoever from the information / opinions / views contained herein.