The recent rally in gold prices appears to be running out of energy, according to market experts. Jateen Trivedi, Vice President and Research Analyst for Commodity and Currency at LKP Securities, suggests the upward move is losing steam, making the precious metal vulnerable to fresh selling pressure.
Technical Setup Points to Weakness
On the Multi Commodity Exchange (MCX), Gold February futures are currently trading near ₹1,37,800. This level comes after a sharp pullback from higher levels, indicating the recovery attempt may be merely corrective. The price is confronting a strong resistance zone near the previous breakdown area, which is capping further gains.
Trivedi points out that prices are trading below a cluster of short-term Exponential Moving Averages (EMAs). Specifically, the EMA 8 has failed to sustain above the EMA 21, signaling a weak short-term structure. This technical configuration implies that any price rallies are more likely to be met with selling rather than extending into a sustained uptrend.
Key Resistance and Momentum Indicators
The analysis identifies a firm resistance band between ₹1,37,800 and ₹1,38,000, coinciding with the upper Bollinger Band. While gold tested lower levels and moved back toward the mid-Bollinger band, overcoming this ceiling seems challenging in the near term.
Momentum oscillators support this cautious view. The Relative Strength Index (RSI) is hovering around 60. While this indicates a short-term recovery, it is not robust enough to confirm a full trend reversal. Historically, such levels near resistance often precede consolidation or a pullback.
Furthermore, the Moving Average Convergence Divergence (MACD) showed a brief positive crossover, but its histogram bars are now flattening. This suggests the bullish momentum is waning, increasing the probability of a downturn from higher levels. Adding to the concern, the recent price recovery has been supported by only moderate volume and soft open interest, hinting at a lack of strong conviction from long-term buyers.
Intraday Trading Strategy and Levels
Given the technical landscape, the intraday setup favors a sell-on-rise approach. Traders are advised to look for selling opportunities in the range of ₹1,37,800 to ₹1,38,000.
The recommended trade setup includes placing a strict stop-loss at ₹1,39,100. The immediate downside targets are pegged at ₹1,36,800, followed by ₹1,36,400. The overall bias remains bearish as long as prices stay below the ₹1,38,000 mark. A decisive move above ₹1,39,100 would be needed to signal renewed strength.
In conclusion, the intraday technical structure for gold remains fragile. With prices below key moving averages and momentum indicators failing to show sustained strength, the resistance near ₹1,38,000 is expected to attract selling pressure. Market participants should consider the sell-on-rise strategy with disciplined risk management during the session.
