Gold prices are anticipated to move towards consolidation in the coming days, according to Manav Modi, Senior Analyst, Commodity Research at Motilal Oswal Financial Services Ltd. The precious metal has entered a crucial consolidation phase following a sharp vertical rally observed around May 13.
Technical Analysis of Gold Prices
On the 1-hour chart, gold prices are currently cooling near the middle Bollinger Band at approximately Rs 1,59,450, indicating a loss of immediate momentum after the breakout spike towards Rs 1,67,500–1,68,000. The Bollinger Bands, which had expanded aggressively during the rally, are now beginning to contract, signaling volatility compression and a potential directional move later this week.
Key Resistance and Support Levels
Technically, immediate resistance is placed at Rs 1,60,800–1,61,800, coinciding with the upper Bollinger Band and short-term supply zone. A sustained move above this region could reopen upside targets towards Rs 1,64,500 and then Rs 1,67,000 again. On the downside, Rs 1,57,200 is the first major support, aligning with the lower Bollinger Band and a short-term Fibonacci retracement zone. Below that, Rs 1,55,500–1,54,800 becomes a stronger positional support area.
Consolidation Pattern and Trend
A developing flag-like consolidation pattern is visible after the impulsive up move, suggesting the broader trend remains positive unless support breaks decisively. Fibonacci retracement from the recent swing low near Rs 1,48,000 to the top near Rs 1,68,000 shows the 38.2% retracement near Rs 1,60,300 and 50% around Rs 1,58,000, making the current zone technically important.
Moving Average Disparity and Volatility
Disparity from the moving average has reduced sharply after the euphoric spike, which is healthy for trend sustainability. If price stabilizes above Rs 1,58,000–1,55,000 while volatility compresses, another expansion move towards higher levels remains possible later this week.
Factors to Watch
It is also important to note that the disparity between international and domestic prices could sustain due to several domestic measures, such as a rise in import duty and restrictions on imports, which have put pressure on market balance and premiums. Additionally, the path of interest rates this year, influenced by new Fed governor Kevin Warsh, will be crucial to track. Along with economic data, any updates from US-Iran and US-China relations will also be important to monitor.
Disclaimer: Recommendations and views on the stock market, other asset classes, or personal finance management tips given by experts are their own. These opinions do not represent the views of The Times of India.
