Gold futures for February delivery fell $10.70 on Friday to $1,364.30 an ounce on the Comex division of the New York Stock Exchange. A firm dollar and increase in margins for gold futures trading on the Shanghai Futures Exchange had an adverse effect on the metal.
Going ahead, futures and options (F&O) participants expect February futures to face strong resistance above $1382.50. Volume-based sell-off can take the metal around $1,337 next week. The weekly market picture chart is hinting at the TPO-based target of around $1,337.50 and volume-based support at $1,325.50. Traders bought gold below $1,355 and booked profit above $1,369.
The initial balance range ($1373-1383), the first two TPO time periods established by the liquidity providers, saw only 3.7 per cent volume and 14 per cent price range, which is hinting at resistance at higher levels. No wonder options traders changed hands in the the $1,350-strike call options of January delivery at a premium of $40. There was buying on Friday in the $1,350-strike put options at a premium of $20 per contract.
The Bollinger Bands (B-Bands), a technical study created by John Bollinger, is hinting at resistance at $1,416 and lower-end support at $1,325.71. Traders generally use B-Bands to determine overbought and oversold zones, to confirm divergence between prices and other technical indicators, and to project price targets.
On the Multi Commodity Exchange (MCX), gold futures for February delivery closed at Rs 20,460 per 10 grams. The market picture chart suggests a TPO-based upside of Rs 20,732 and volume-based support around $20,272. Gold may move up afresh and even touch Rs 21,000 if the rupee depreciates further.
The MCX December futures of the Indian rupee is expected to move up around $46.70 in the near future, the market picture data suggest. Investors were expecting the dollar to strengthen and saw no reason to hold gold, said David Wilson, an analyst at Societe Generale.
On a weekly basis, gold rose $12, or over a per cent, snapping two consecutives weeks of losses. We had indicated in this column that gold might face strong resistance above $1,380 and not go down substantially below $1,348. The gold futures for February delivery hit a low of $1,347.90 and a high of 1,382.90 to settle at $1,364.30 on Friday.
