The gold futures for December delivery hit an all-time high of $1,301.60 an ounce last week and is still showing significant strength on the weekly market picture chart with time-price opportunity (TPO) and volume data pointing at the $1,315-1,319.50 level next week.
The trading pattern in call and put options for October series are hinting at buy trades in the 1,300-strike call and selling in the $1,325-strike options.
The participants sold the $1,300-strike put when gold moved convincingly above $1,295. The build-up of open interest in the $1,290-1,300-strike put indicates that gold may not fall below $1,290.
The 21 days moving average data indicate resistance for gold at $1,325 and strong support at $1,270. The 21 days relative strength index (RSI) surged above 70 at 75.76 last week, signaling overbought positions. A high RSI, above 70, suggests an overbought or a weakening bull market. Conversely, a low RSI, below 30, implies an oversold market or a dying bear market.
On the Multi Commodity Exchange, gold futures for October delivery is expected to move up around Rs 19,380 per 10 grams with strong TPO-based support at Rs 18,980.
Gold futures for December delivery closed at $1298.30 an ounce on Friday on the Comex in New York, posting a weekly gain of $20.80, or 1.63 per cent, on short-covering. We hinted at a volume-driven level of $1,298.50 and strong resistance above 1,300 in our column last week. Silver climbed to the highest price since 1980 as the dollar’s slump boosted demand for precious metals.
The dollar fell to the lowest level since February as against a basket of six major currencies as the Federal Reserve kept borrowing costs low and moved closer to easing monetary policy to bolster the US economy. “You’ve got a lot of open sky for gold,” said Michael Guido, the director of hedge fund sales at Macquarie Bank in New York. “There’s no fear of higher rates to come and the dollar is back to playing defence.”
Gold reached a record for the sixth time in seven sessions and investors are looking for a cheaper alternative in silver, analysts say. Hedge fund managers and other large speculators decreased their net-long positions in New York gold futures in the week ended September 21, according to the US Commodity Futures Trading Commission data. Speculative long positions outnumbered short positions by 244,013 contracts on the Comex division of the New York Mercantile Exchange, the Washington-based commission said in its Commitments of Traders report.
