During the trading session on July 27, gold experienced a decline of approximately Rs 511 and concluded the day at Rs 58,950 after reaching an intraday low of Rs 58,740 on the MCX.
The decisive factor that led to the decline in gold prices was the release of strong US advance GDP numbers. The initial estimate for the second quarter showed a year-on-year growth of 2.4%, surpassing market expectations of a 2% rise.
Furthermore, in June, U.S. durable goods orders saw a notable increase of 4.7%, well above the expected gain of 1.5%. As a result of this data, U.S. Treasury yields and the dollar index rose significantly, both of which exerted negative pressure on precious metals.
Notably, consumer spending also exceeded expectations, expanding by 1.6% during this period, following a strong surge at the beginning of the year.
The positive US economic data has put downward pressure on gold prices, and it is anticipated that they may experience a further dip of USD 10 to USD 15 in the international market in the short term. Nevertheless, the experts also anticipate value buying to occur at support levels.
Moreover, US durable goods orders saw a notable increase of 4.7%, well above the expected gain of 1.5%. As a result of this data, US Treasury yields and the dollar index rose significantly, both of which exerted negative pressure on precious metals.
Both gold and silver prices experienced a decline from their weekly highs following the release of better-than-expected US GDP and jobless claim data as per commodity market experts.
Furthermore, various analyst expects a rebound in gold prices from support levels. They anticipate value buying to occur around Rs 1,945 to Rs 1,940 levels in the international market. Additionally, they foresee bottom fishing opportunities below Rs 59,000 levels on the MCX.
If we observe the technical chart of gold futures, then after reaching its peak high of Rs 61,845, gold futures entered a consolidation phase for a few days. On May 16, 2023, it experienced a sharp decline of nearly Rs 783 or 1.28%, forming a significant red engulfing bar on the chart.
Subsequently, the price continued to fall and reached a low of Rs 57,651 on July 29. However, on July 20, it managed to recover approximately 3.96% or 2,280 points from these lows. By using the Fibonacci Retracement tool on the chart, it becomes evident that gold is encountering resistance at the 50% level, drawn from its peak levels of Rs 61,845 to Rs 57,651.
Despite the recent fall on the previous day, if gold rebounds from its current levels and surpasses the previous swing high of Rs 59,984 in the upcoming sessions, it may indicate the formation of higher highs and higher lows, which is considered a bullish signal. Some of the experts expect that gold prices are presently in a phase of base building and may stay in the range.
Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet, and is subject to changes. Please consult an expert before making related decisions.