Gold Prices Show Recovery Signs on MCX, Analysts Advise 'Buy on Dips' Strategy

Gold futures on the Multi Commodity Exchange (MCX) are trading around ₹1,20,880, indicating a recovery after a previous session's decline. This rebound from a key support level near ₹1,20,000 comes as traders anticipate steady buying interest, potentially influenced by upcoming U.S. economic data. Jateen Trivedi, VP Research Analyst - Commodity and Currency at LKP Securities, recommends investors adopt a "buy on dips" strategy, suggesting that short-term momentum is gradually improving.

Technical analysis indicates a constructive setup. The 8-period Exponential Moving Average (EMA) is attempting to cross above the 21-period EMA, signaling a possible short-term trend reversal. Prices are recovering from the lower Bollinger Band and hovering near the mid-band, with the upper band at ₹1,21,800 acting as immediate resistance. The Relative Strength Index (RSI) has moved up to around 51, indicating strengthening buying momentum, while the Moving Average Convergence Divergence (MACD) shows early signs of a positive crossover. Support is seen at ₹1,20,100, with resistance at ₹1,21,450.

Impact: This news suggests a potential short-term upward trend for gold prices on MCX. The advised "buy on dips" strategy, supported by technical indicators, could lead to increased trading volumes and upward price movement if key resistance levels are breached. Investors following this advice might see profitable short-term trades. Impact rating: 7/10

Difficult terms: * **MCX**: Multi Commodity Exchange of India Limited, a commodity derivatives exchange. * **Buy on dips**: An investment strategy where investors buy an asset when its price has fallen, expecting it to rebound. * **EMA (Exponential Moving Average)**: A type of moving average that places a greater weight and significance on the most recent data points. It helps identify trends. * **Bollinger Bands**: A technical analysis tool consisting of a set of lines plotted two standard deviations away from a simple moving average of its price. They help gauge volatility and identify potential price reversals. * **RSI (Relative Strength Index)**: A momentum indicator that measures the speed and change of price movements. It ranges from 0 to 100 and is typically used to identify overbought or oversold conditions. * **MACD (Moving Average Convergence Divergence)**: A trend-following momentum indicator that shows the relationship between two moving averages of a security's prices. It can signal changes in momentum. * **Pivot Points**: A technical indicator used by traders to determine the potential support and resistance levels of a security. * **Stop-Loss**: An order placed with a brokerage to buy or sell a security when it reaches a certain price. It is used to limit an investor's loss on a security transaction.