Wealthova: “Commodity Radar: Gold’s 26% Correction Signals a Sideways Trend, Advocating a Sell-on-Rise Strategy”
Gold prices have experienced a significant correction, declining by nearly 26% or Rs 53,000 per 10 grams from their all-time high of Rs 2,02,984 at the MCX. As of Tuesday, the yellow metal traded down over Rs 3,000, marking a 2% decrease with a day’s low of Rs 1,48,681. The cautious sentiment among investors is largely attributed to uncertainty surrounding the Federal Reserve’s policy decisions, with the Federal Open Market Committee (FOMC) meeting commencing today. Experts suggest that gold’s price action is currently characterized by a sideways-to-weak structure, with indications of loss of bullish momentum and the formation of lower highs, which may result in selling pressure on any upward rallies.
According to Jateen Trivedi, Vice President and Research Analyst at LKP Securities, the macroeconomic backdrop remains volatile, driven by elevated inflation, geopolitical tensions, and other critical economic indicators, including the GDP data and core PCE Price Index. The current dynamics suggest that a cautious approach may be warranted, particularly given the weak rupee against the US dollar, which could offer some support to gold prices. Nevertheless, a strengthening rupee could further undermine gold’s attractiveness as an investment. Immediate resistance levels are identified at Rs 1,52,500 – Rs 1,53,000, while immediate support is placed at Rs 1,50,000, with major support at Rs 1,48,500.
In terms of technical indicators, RSI readings are near the 49–50 range, suggesting neutral momentum, while the flattening Bollinger Bands indicate a period of consolidation that may precede a directional move. The Moving Averages, including the EMA 8 and EMA 21, reinforce the resistance zone near Rs 1,53,000, indicating a lack of trend strength. The MACD also remains near the zero line, reflecting fading bullish momentum. Based on these indicators, Trivedi recommends adopting a ‘sell on rise’ strategy in the Rs 1,52,500 – Rs 1,53,000 range, with a stop-loss positioned above Rs 1,55,500. The target for this strategy is set at Rs 1,48,500, as significant resistance is expected on any upward price movements.
Source: The Economic Times
(Expert Note: This report was prepared by the Wealthova team.)