Category Archives: Gold Technical Analysis

Gold Technical Analysis from 30 Sept’13 Onwards

Gold Daily Chart

Gold Daily Chart

MCX Gold Daily Chart

MCX Gold Daily Chart

Yellow Metal is forming its base in International market, which is reflected in MCX Gold as well.

Technically Speaking –

International Gold @ 1336.30 making marginal higher lows from last four sessions, forming a minor trend line upon which it is taking support.

Week on week basis Gold prices moved higher by $10.

As shown in attached Gold prices reached closed to falling trendline resistance, breakout from this line will entice further buying interest in Gold.

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Gold Technical Analysis from 23 Sept’13 Onwards

Gold Daily Chart

Gold Daily Chart

MCX Gold Daily Chart

MCX Gold Daily Chart

In last week there was lot of speculation and rumors were floating around Gold and for that matter for almost all Metals, that there was leakage of Information about Fed is not moving towards tapering, and insiders have used this opportunity to gain from this information. But unfortunately this information holds good only for one day, immediately on next day Gold Index gave small candle and turned lower in subsequent session. Let’s take a technical look. To read full report, just register here and get report in your mail box absolutely free. Click here to register Few Clarifications –

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Gold Technical Analysis from 16 Sept’13 Onwards

Gold MCX Daily Chart

Gold MCX Daily Chart

Gold Index Daily Chart

Gold Index Daily Chart

At Way2Profits, we received few request from our readers to start weekly technical analysis on Gold, so we are attempting to give weekly outlook on MCX Gold. We hope our readers will find it useful.

As show in attached, Gold in International market, after forming a rising channel from July’13 onwards, gave breakdown in last two trading sessions. Although, it started correcting after posting a high of 1433 in the end of Aug’13 itself.

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Technical analysis of Gold

Gold as on 22 Feb'13 - USD 1581

Gold as on 22 Feb’13 – USD 1581

In the International market Gold is falling due to variety of reasons, there are much strong fundamental news flowing around, but I would like to draw your attention towards some simple technical observations.

As you can see in above attached chart that, Gold is falling in a channel line from beginning of Oct’12, and in last week only it gave sharp dip below lower channel line, which was indicative of strong selling pressure (I would not discuss any fundamental news attached). Channel has validated its authenticity in past, so if prices moves again in the channel line, than it is one signal where we can go long in Gold, but you can’t expect prices to touch upper channel line this time.

Secondly, momentum oscillator RSI (14) has reached historical low of 20, I have marked with red circle in chart. By this, please don’t expect bounce in prices, as prices have tested oversold territory, No. In past very few time RSI has tested this level in Gold chart, and whenever it has tested this level, prices consolidated and moved slightly lower. Confused, let me clear. From here on, prices may consolidate further and it is possible that after normalizing momentum we might see one more dip in price, but such dip should be utilized as a buying opportunity, by looking at divergence between Price and RSI, I hope I made it very clear. You have to keep little patience here to grab right opportunity.

Few of my friends must be betting that prices will retest its low of USD 1527 made in May’12, but does it make any difference, whether prices test this level or not, major damage is already done.  This time prices made a low of USD 1555.

I would not recommend to place stop loss below this level and take a long position, although it looks good, but I sense that we might see one more dip in price, and that should be utilized, by looking at price pattern at that point in time. Yes, aggressive traders can take minor longs as and when prices move above this channel line, which is coming near USD 1590 (prices should give close above this level and stay).

Lastly, on broad level, I don’t expect Gold to ride further and even testing its Major High near USD 1930.  Gold has shifted its range, expect it to stay consolidate to weak.

I welcome all your feedback and suggestions.

 

Why Prices of Gold not falling in Indian Market???

Or

Why Gold is Expensive in Indian Market.

Many Investors are amazed at this point in time, when Gold was continuously falling in International markets, but not in Indian markets, basically it has to follow the suit and react accordingly.  Investors are right, but pricing model of Gold is not as straight.  In this article we try to investigate reasons behind variation in Indian Gold price and its prices in International markets.

Before going further we should take one glance at some of facts & figures about Gold.

  • First and fore most reason is India is net importer of goods & services, including Gold & Silver.
  • Whether we believe it or not Indian is the world’s largest consumer of Gold, India accounts for nearly one-third of the total world demand for gold.
  • Indian is not largest consumer but also largest Importer of Gold, and Average rate of growth of import from 2008 – 2011 is 26.8% p.a.  Gold’s share in total import bill of the country has gone up from 8.1 per cent in 2001-02 to 9.6 per cent in 2010-11.  In terms of percentage share of gold and silver combined were the 2ndmost imported commodity in 2010-11.

From above facts it can understood that India is the biggest consumer and importer of the Gold, due to variety of reasons, which can altogether become different topic to discuss for.  Now, coming to the point, because of India is net importer of Gold, price of Gold varies with the exchange rates from which India is importing.  Moreover such transactions happens in Dollar, considering most liquid and globally accepted currency; so price of gold varies with movement in US Dollar with Indian Rupee (USD/INR).  So if Rupee appreciates in compare to Dollar, price of Gold tends to fall, and if Rupee weakens so the Dollar appreciates, price of Gold increases, irrespective of fluctuation in International price of Gold, and obviously with fluctuation in International prices of Gold, pricing in India will be accordingly adjusted.

Above points can be looked with two base case scenario, one in which only prices of base currency changes and not the actual price of Gold, and other scenario could be prices of Gold changes without any change in currency quotes.  In real world, both scenarios occur simultaneously and a price of Gold varies keeping every aspect in consideration.

Lets look at first scenario, where a price of Gold remains static in International market, and we only notice change in price of Gold due to change in currency valuations.  If Rupee depreciates in compare to Dollar (Base Currency), for example current USD/INR quote is 55 and if quote rises to 56 than it means Rupee is depreciating in compare to Dollar, than in that case prices of Gold will rise; whereas if Rupee appreciates than prices of Gold tends to fall.

In second scenario, where we only notice fluctuation in price of Gold, assuming there is no change in currency quote.  It is very much obvious that keeping all other things constant, with rise in International price of Gold, inevitably price Gold in Indian market will rise.

In practicality things are not as simple as we explained above, commodity prices are influenced by number of factors namely, price is function of demand & supply, fundamental reasons which can affect the commodity prices and last not the least any asset class including commodities are influenced  by the speculative forces.