Gold is on Verge of Breaking Out

Gold is on Verge of Breaking Out

Gold rally continue for the third month to touch high of 1344.81 before settling at 1331.84. The weakness in dollar against major currency drives safe haven demand in gold. Also, crash in crypto currencies related fund moved to gold. Gold has jumped 2.2% this year, touching the highest price in four months, as the dollar fell, Chinese consumers stocked up for the Lunar New Year and signs of global inflation picked up.

Global holdings in gold exchange-traded funds soared to the highest level since 2013 as investors got behind a rally in the metal. Holdings in gold exchange traded funds jump 13.7 tons, most since September, the total assets climb to 2241.2 tons.

Hedge fund managers boost net bullish bets on gold as they have added 5927 net long positions to 203967 contracts as per the weekly CFTC data on futures and options shows.

The uncertainty over US government shutdown may further give boost to precious metal rally.

At domestic front, gold imports for the December month rose 53 per cent to 846 tonnes last year on strong domestic demand and lower global prices, according to MMTC-PAMP India.  In December 2017 alone, gold imports rose to 70 tonnes from 49 tonnes in the year-ago period.

Technically, gold is on verge of breakout above $1370/oz. The sustainable break out above said level will open higher side up to $1630/oz. while downside support has been seen around $1220/oz. At domestic front strength in rupee may restrict some of the gains but the view remains same. Domestic gold price likely to touch all-time high to Rs. 35000 within 2 year once it starts trading above Rs.30450 per 10 grams.   The near term support remains around Rs. 28500 per 10 grams.