By Bhavik Patel
While markets await Friday’s jobs report, gold prices continue to remain range-bound, but the October rally is still in place. Gold sellers are being restrained by investors’ growing confidence that the period of tightening by major central banks is ending and their belief that rate reduction may occur sooner than expected. The Federal Reserve is widely expected to leave rates on hold at their monetary policy meeting next week, with the market pricing in a 50% chance that rate cuts will start in March next year. The gold market is not seeing much reaction to the latest employment data on Thursday as it looks to recover from Monday’s technical blowoff top.
Turning to market positioning, the World Gold Council wrote that net long positions in the gold futures markets increased over the course of last month. Net long positioning on COMEX rose further, totalling 658t at the end of November, a 23% increase m/m and 25% above the 2022 average (527t). Looking into 2024, we believe we will see a resurgence of investor interest in the precious metal and a return to net inflows given higher gold prices as US interest rates fall.
In MCX, we expect prices to consolidate for this 2-3 weeks and any dip around 61,500-61,000 should be taken as buying opportunity. Momentum oscillator RSI_14 is now at 63 so gold is not in overbought zone but we don’t expect any sharp rally on the upside for the time being. It would be frustrating for day traders to take any gauge and direction as gold is likely to trade in range but for positional traders, they should look for any correction of more than 1.5% to accumulate long positions.
(Bhavik Patel is a commodity and currency analyst at Tradebull Securities. Views expressed are the author’s own. Please consult your financial advisor before investing.)
