Gold prices are exhibiting a broadly positive trend, and investors should consider adopting a 'buy on dips' approach through a staggered investment strategy, according to market expert Manav Modi. The Senior Analyst of Commodity Research at Motilal Oswal Financial Services Ltd. has shared his outlook and crucial price levels for gold investors to monitor in the near term.
Volatility Dominates Holiday Trading
Despite the Christmas and New Year holiday period, last week's trading was marked by significant volatility. Silver prices witnessed a range of over $10, while gold fluctuated sharply, trading above $4500 for several days before dropping below $4400. This volatility persisted amid economic updates and, more notably, due to a parity mismatch exceeding 2% between international and domestic exchanges. In India, domestic gold traded at a premium of more than ₹3000 compared to the Spot price.
Geopolitical Tensions and Technical Structure
Over the weekend, news of the US taking greater control over Venezuela injected additional risk premium and uncertainty into the markets. However, with supply control factors in play, the market's reaction as it resumes after the New Year break will be crucial.
Technically, gold prices recently tested key lows and breakout levels around ₹135,000 before inching higher. The broader structure continues to favor the 'buy on dips' strategy. Immediate supports are firm at ₹135,000 and ₹132,000. On the upside, a significant resistance zone exists near ₹138,000, which aligns with the upper Bollinger band and a 61.8% Fibonacci extension level.
Critical Price Levels and Market Triggers
A decisive break above the ₹138,000 resistance with strong volumes could trigger further buying momentum. Conversely, failure to breach this level may keep prices trading in a broad range. A break below the key support could see prices slide towards the lower Bollinger band support near ₹130,000. An upside breakout, however, could open the path towards a target zone of ₹143,000–144,000.
As the new trading week begins, investor focus shifts to a slew of upcoming economic data. Inflation figures, GDP reports, and PMI data from major economies, along with delayed U.S. labour market releases, are expected to critically influence monetary policy expectations and set the near-term direction for gold and silver prices.
(Disclaimer: The recommendations and views expressed by the expert are their own and do not represent the views of The Times of India.)
