Bears tighten grip on gold
With rising prices and falling volume soft he metal, USFed, EC B expected to provide clarity on Friday
With gold prices hovering around $1,300 per ounce internationally and about ~29,000 per 10 gm in India, bears are tightening their grip by raising speculative short bids in gold futures.
Last week, gold prices failed to appreciate beyond the $1,300 limit, and have since fallen, remaining in a tight range.
With hopes of prices rising, Indian traders are increasing bear bets. Open interest has surged to above 11,156 lots from 9,060 at the beginning of August.
Of these, the top 10 long side-open positions are 3,691 lots. Short positions of the top 10 traders are at 6,333 lots. Gold futures are actively traded on Multi- Commodity Exchange (MCX).
With rising prices, however, volumes have fallen, indicating cautiousness. On the MCX, gold futures volumes fell from ~2,963 crore on Tuesday.
There is a reason for this. On Friday, Federal Reserve Chairperson Janet Yellen and European Central Bank President Mario Draghi are expected to speak on how interest rate and liquidity are expected to move. They both are likely to indicate what the key things to watch out for will be, said a person with a bearish person in bullions.
Yellen and Draghi might indicate how the dollar and gold would move and how monetary policies in these two major economies were shaping up.
Ajay Kedia, director, Kedia Commodities said, “The dollar index is around 93 and historically; 92.5 has acted as a strong support level. Going ahead, chances are it will recover from here. This is a negative signal for gold, as rising dollar is a bearish sign.” This seems to be helping punters to build heavy short positions in the beginning of the October gold contract. But not everyone agrees with Kedia.
Anuj Gupta, head of research at Angel Commodities, said “Technically gold is looking positive. We are expecting it to touch $1,320-1,330 in the short term (one to three months), with strong support at $1,250. The rally might sustain to $1,320.
“On the MCX, prices can find support at ~28,800-28,600. Technically, prices are in bullish momentum and this would rally towards 30,30030,500.”
Since the beginning of August, gold prices on the domestic markets have risen about 2 per cent. It closed on Wednesday at ~29,172 per 10 gm.
Open interest has surged to above 11,156 lots from 9,060 at the beginning of August