Movement in gold this month, has been very volatile and erratic. It demonstrated some very good gains in the beginning of the month, as the financial markets in the U.S. were collapsing. These gains were held on back of safe haven buying as the turmoil in financial markets was happening globally.
MCX gold hit a new high of Rs.14307/10g as the depreciating INR against dollar also provided support to the metal. However, spot gold could not sustain at higher levels and faced stiff resistance near $930 an ounce. This rise in the metal was countered by the bailout packages and various other steps taken by the Central Banks and government of various countries to avoid further fall in financial markets and add liquidity in the system.
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So the traders will have to keep a track of the financial markets as a recovery in them globally might put some barrier to the rise in the prices of the metal. After facing stiff resistance at the level of $930/oz, it has corrected quite sharply in the recent days.
As is evident in the Daily chart, the yellow metal has been facing stiff resistance at the upper trendline and has corrected every time after touching that level to find support at the downtrenline.
So we can still see some more correction in the counter and it can test the support level of $650/oz, which is quite crucial. A bounce back in the metal is quite likely from that level, but breach of that, might trigger a huge round of sell off to find sustainability at $550/oz.
