By Bhavik Patel

Gold’s next trigger would come after the Kansas City Federal Reserve hosts one of the most important economic symposium in Jackson Hole and today’s keynote speech by Chairman Jerome Powell will garner the most attention. Compared to the last 3-4 years, this year’s symposium occurs at a critical time as the Federal Reserve began an aggressive tightening of its monetary policy. Market is confused right now which way Powell will drift, hawkish or dovish. Chairman Powell will continue to walk an extremely thin tightrope between the current economic contraction and the current level of inflation. Important thing to notice is gold’s price movement before this meeting. Gold has risen from its low of $1678 on July 21 to its current value of $1754 today.

Trend in Gold on MCX and COMEX is different. While in COMEX, trend still is bearish as prices are trading below 14 and 50-day moving averages but in MCX, prices are trading above 20 and 50 day moving averages. In COMEX as seen from the chart, prices have taken support around 38.6% ($1730) retracement and taken resistance at 61.8% ($1764) retracement. Any change in trend will come after Gold breaches the resistance of $1768 (61.8% retracement) and its 50 day moving average. Gold has support at $1722 and $1710 while first resistance is at $1768 followed by $1781 and $1800.

In MCX compared to COMEX, the trend is positive thanks to the weak Indian Rupee. As seen on the chart, prices are trading above its short term moving average of 20 and 50-day and also there was a buy crossover around levels of 50980 which is still in play. Trend line breakout comes at 52400 and just like in COMEX, where breakout is above $1768, in MCX, breakout is above 52400. Gold has already established its base where it made double bottom around levels of 49600.

So in the worst case scenario, gold may fall till 49600 if Powell becomes extra hawkish and if he is dovish, then we may soon test levels of 52400. Today’s keynote speech will give direction to gold but technically it is already pointing to a positive trend in Gold. We believe even if Fed is hawkish, it will give bulls a chance to buy from dips and any levels around 51000 can be bought with expected target of 52400 and stoploss of 50500.

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(Bhavik Patel is a commodity and currency analyst at Tradebulls Securities. Views expressed are the author’s own. Please consult your financial advisor before investing.)