Gold price today: Yellow metal trades below Rs 50K; sell for a target of Rs 49,250

Gold was trading below its crucial psychological support placed at Rs 50,000  on September 24, tracking the muted trend in international spot prices.

Experts are of the view that the weakness is likely to continue and traders could well go short in October Futures for a target of Rs 49,250. Below Rs 49,250, the major support is placed at Rs 49,000.

On the Multi-Commodity Exchange (MCX), October gold contracts were trading lower by 0.38 percent at Rs 49,320 per 10 gram at 0920 hours. September silver futures were trading 3 percent lower at Rs 56,700 per kg.

In the international market, gold and silver tumbled again amid gains in the dollar index and upbeat US manufacturing PMI data. The US dollar index reached a two-month high and triggered a sell-off in both the precious metals.

Gold slipped 2.05 percent and settled at $1,868.40 per troy ounce and silver also tumbled to $23.10 per troy ounce with a loss of 5.83 percent on September 23.

Uncertainty over further stimulus support from the US Federal Reserve also pushed both the precious metals lower along with a rise in the dollar index, experts said.

“We expect the dollar index could show further strength and continue to put pressure on gold and silver prices. Gold below $1,874 could test $1,855-1,840 per troy ounce in the coming sessions, $1884 act as major resistance for the gold,” Manoj Jain, Director (Head-Commodity & Currency Research) at Prithvi Finmart told Moneycontrol.

“At MCX, gold below Rs 49,660 could test 49,300-49,000 levels, 49,800 acts as major resistance for the gold. Silver is also looking weak and below $23 per troy ounce, it can test $22.55-22.20 per troy ounce in the coming sessions, with $23.55 acting as major resistance.”

On MCX, if silver trades below Rs 58500, then it can test Rs 57,700-56,800 in the session, Rs 59,500 will act as major resistance . The sell-on-rise strategy will work in both the precious metals, Jain added.

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Trading Strategy

Expert: Sriram Iyer, Senior Research Analyst at Reliance Securities

on September 23, international bullion fell to the lowest in over two months as the dollar continued to show strength. The dollar index hit an eight-week high, dimming the appeal of bullion to holders of other currencies.

Gold prices declined, despite US stocks retreating after data showed the  business activity in the country nudged down in September.

Domestic bullion could start flat-to-lower on September 24, tracking international prices. Domestic gold and silver tumbled the previous day, tracking weak overseas prices.

Technically, MCX October gold's break below Rs 49,600 level indicates that bearish momentum may continue to up to 49,280-48,760 in the coming sessions. Resistance is at 49,650-49,900.

MCX December silver contract's breakdown below Rs 59,000 levels with more than 4.5 percent loss from the previous session indicates that a strong bearish trend will continue up to Rs 57,800-56,150. Resistance is at Rs 59,800-60,700.

Strategy for gold: Sell October gold at Rs 49,600 with a stop loss at 49,750 and target at Rs 49,250.

Strategy for silver: Sell December silver in a range of Rs 59,100-59,200 with stoploss at Rs 59,700 and a target of Rs 58,200.

Ravindra Rao, VP- Head Commodity Research at Kotak Securities

Comex gold hit a July low of $1,855.5/oz but came off the lows to trade near $1,860/oz. Gold remains under pressure due to firmness in the dollar and weaker investor interest.

Gold has broken the key $1,900-level and weakness may persist unless there is a significant correction in US dollar.

Disclaimer: The views and investment tips expressed by experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.