Can gold fall up to Rs 86,000? What technicals suggest

Gold’s June contracts fell by Rs 1,300 per 10 gram on Wednesday, extending their losses to more than Rs 7,000 from their all-time high. The yellow metal prices could further fall to levels around Rs 90,900 in the positional term and hence warrant a sell on rise strategy.

Anuj Gupta, Head Commodity & Currency at HDFC Securities recommends a ‘Sell’ on MCX June Gold futures at Rs 92,500 for a price target of Rs 90,950 and a stop loss of Rs 93,650.

Notwithstanding a sharp fall, gold prices are still up 20% or Rs 15,706 crore on the year-to-date basis.

On the COMEX, Gold contracts were trading at $3,235.50 per troy ounce, down by $12.30 or 0.38%.

The climbdown in yellow metal prices has been on account of a host of factors including a US-China tariff truce, fall in inflation, global inflation and a ceasefire between India and Pakistan.

Commenting on the action, Renisha Chainani, Head - Research at Augmont said that gold has fallen to its lowest level in almost a month following the US and China agreement to significantly reduce tariffs. He sees uncertainty surrounding the direction of trade talks.

“Because of the modest April CPI miss, the US dollar is under less pressure, and tariffs have less immediate effect. The April US inflation report was marginally weaker than what market participants had anticipated monthly,” Chainani added.

The World Gold Council reports that gold ETFS saw net inflows of 115 tons in April, the biggest monthly rise in more than three years and the fifth consecutive month. Nearly 65 tons of these inflows came mostly from China.

Technical Triggers
Gold prices may drop to Rs 92,000 ($3,200) if they remain below Rs 94,000 ($3,265) this week, Chainani said, adding that a further fall up to Rs 86,000 ($200) could not be ruled out if Rs 92,000 is breached lower.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)