Gold Price Warning: Is Your Investment Safe? Expert Reveals Bearish Bias & Sell-On-Rise Strategy!

Author

Satyam Jha | Whalesbook News Team

Detailed Coverage:

Jateen Trivedi, VP Research Analyst - Commodity and Currency at LKP Securities, suggests that gold prices are exhibiting a bearish bias and are likely heading for short-term consolidation. After a recent rally, profit-booking has emerged, with gold futures on MCX trading slightly lower around ₹1,26,650. The metal faced resistance near ₹1,27,200.

Technical Setup Details: Key technical indicators point to a weakening trend. The short-term Exponential Moving Average (EMA 8) has flattened and is nearing the 21 EMA, indicating a loss of momentum. Bollinger Bands show prices retreating from the upper band, signaling a weakening bullish phase, with the mid-band at ₹1,26,100 acting as support. The Relative Strength Index (RSI) has fallen to 45, down from overbought levels, suggesting reduced buying interest. The Moving Average Convergence Divergence (MACD) histogram is narrowing, and the MACD line is approaching the signal line, hinting at a potential short-term bearish crossover.

Strategy: The recommended strategy is 'sell on rise' within the ₹1,27,000 – ₹1,27,200 entry zone, with a stop-loss set at ₹1,27,650. The targets are ₹1,26,100 and ₹1,25,600. The bias is bearish below ₹1,27,200, weakening further if prices sustain below ₹1,26,100.

Impact This analysis directly impacts commodity traders and investors holding gold positions. A 'sell on rise' strategy suggests potential downward price movement, which could lead to losses for those holding long positions, but an opportunity for short-sellers. It can influence investor sentiment towards gold as a safe-haven asset in the short term. Rating: 5/10

Difficult Terms: Technical Setup: An analysis of past price movements and trading volumes to predict future price trends using charts and indicators. Bearish Bias: A tendency for prices to move downwards. Consolidation: A period where an asset's price trades within a narrow range, indicating indecision in the market. MCX (Multi Commodity Exchange of India): India's leading commodity derivatives exchange. Profit Booking: Selling an asset after its price has risen to secure gains. Resistance: A price level where selling pressure is expected to overcome buying pressure, preventing further price increases. RSI (Relative Strength Index): A momentum oscillator used to measure the speed and change of price movements, typically ranging from 0 to 100. Bollinger Bands: A technical analysis tool consisting of three lines plotted above and below a simple moving average, used to measure market volatility. EMA (Exponential Moving Average): A type of moving average that places greater weight and significance on the most recent data points. MACD (Moving Average Convergence Divergence): A trend-following momentum indicator that shows the relationship between two moving averages of a stock's price. Sell on Rise: A trading strategy where an investor sells an asset when its price increases, expecting it to fall later. Stop-Loss: An order placed with a broker to buy or sell a security when it reaches a certain price, intended to limit an investor's loss.