Gold: A knight in shining armour

The belief that the yellow metal will hold its value better compared to other assets amid fallout from covid-19 ripples through world economy is keeping gold marathon intact. In recent times, the Federal Reserve's stimulus has pushed inflation-adjusted bond yields to record lows, making non-yielding gold more attractive. Also, the greenback has weakened sharply, making bullion cheaper for buyers. As seen in the daily chart, MCX Gold breached a top-to-top trend line and hit a fresh life time high of Rs.55039/10 gms. It have been consistently breaching all the key resistances due to ongoing mixed sentiments in the markets with investors/traders playing cautiously keeping gold's safe haven card in hand. 

Now traders have a new dilemma ahead of them-US China trade talks due on Aug 15. The trade talks are to assess Beijing's compliance with the bilateral trade agreement signed early this year. As we all know, the relations have deteriorated in recent months with Trump blaming China over the coronavirus outbreak. But the trade talks come ahead of the US Presidential elections due on Nov 3, so we cannot rule out the fact that there will be some positive outcome. So we expect the volatility in gold may continue.

Technically, the RSI at hovering around 93.6 which indicates overbought position and hence we can expect the yellow metal prices to witness a small dip on account of profit booking till 54500-53850. However, there are no signs of the bullish trend to change. Hence, every dip is a buying opportunity in gold. In MCX Gold 53850 is a crucial support from where a reversal can be seen. On upside, resistance is located at 56300 which is the key 127.2% Fibonacci Projection level and then next resistance lies at 53650.