Weekly gold price charts show a bullish Ascending Triangle formation. Momentum indicator Moving Average Convergence Divergence or MACD has reflected a positive crossover with a fresh buy signal even as it traded above the signal line, which is a bullish signal.
Gold is inversely related to the US dollar. “The USD is likely to weaken a bit and this can further aid the likely spike in gold price,” said Milan Vaishnav, Technical Analyst, Gemstone Equity Research and Advisory.
“If international price of gold moves past $ 1,370, it will result in a breakout from the Ascending Triangle formation. There are high probabilities of the breakout occurring over the coming weeks,” said Vaishnav. The metal is trading around $ 1,340 in global markets.
Even as gold consolidates in a range, OBV or on balance volume has already started rising, which indicates more buy volume than sell volume. RSI is marking higher bottoms and is on the looking for a breakout from a formation – another bullish indication.
On the domestic front, gold prices are in a medium-term uptrend for last four months. They have jumped nearly 9 per cent to Rs 31,058 per 10 gm as of April 17 from Rs 28,421 on December 13 last year.
Best buying opportunity in yellow metal would only on a sustainable breakout above Rs 31,562 level, says Mazhar Mohammad, Chief Strategist – Technical Research and Trading Advisory, Chartview India.
As this metal is moving in an Ascending Channel for last 16 months, such a breakout shall throw up a lucrative target of around Rs 34,500 over time. A more realistic target for the near term would be Rs 32,455. Till such a breakout occurs, this metal is likely to move in the Rs 31,562-30,900 range, whereas short-term selling pressure can be expected on a close below Rs 30,850 level, he said.