Commodity Radar: Gold's appeal grows amid weak US payroll data, tariff scare. Here's strategy to trade

Gold became dearer by over Rs 800 per 10 gram on the MCX on Monday taking cues from overseas prices as tariff uncertainties coupled with lower than estimated non-farm payroll data led to an investor surge towards the yellow metal.

The October gold futures on the MCX shot up by Rs 820 per 10 gram or 0.8% to hit the day's high of Rs 1,00,575. The yellow metal prices on the COMEX were hovering near $3,401.40 per troy ounce, gaining $52.80 or 1.58%.

Trump's tariffs on dozens of US' trading partners including India becomes effective on August 7.

Commenting on the current trends, Jateen Trivedi, Vice President- Commodity Research at LKP Securities, said that gold has seen a late-week surge as the US non-farm payrolls data came in lower than expected while unemployment ticked higher.

"This rekindled expectations of a potential Fed rate cut as early as September, supports the safe-haven appeal of gold. Additionally, ongoing global trade tensions and geopolitical uncertainty are helping maintain bullish undertones," Trivedi said.

Among domestic factors, movement of rupee will be keenly watched.

"The Indian rupee remains under pressure amid trade tariff uncertainties, and this weakness may continue supporting MCX gold despite global corrections. Rupee's performance will remain key in determining MCX gold's relative strength versus COMEX," the LKP analyst said.

Investors should also keep an eye on the Reserve Bank of India (RBI) monetary policy which will be announced on Wednesday, August 6. The three-day meeting of the rate-setting committee begins today.

A dovish RBI tone will likely support gold further.

1. Support & resistance

Gold August futures have rebounded strongly from the support zone near Rs 97,400 after a prolonged correction. The current momentum has taken price above Rs 98,500 with immediate resistance now visible at Rs 99,850–Rs 100,300. On the downside, Rs 98,200–Rs 97,400 remains a near term support band, while a sustained move above ₹100,300 may lead to a broader breakout toward Rs 101,000. The structure now tilts bullish, provided Rs 98,000 is not breached on a closing basis.

2. RSI (14) – 54.70: Building positive momentum

The Relative Strength Index (RSI) has climbed back to 54.70, rising from near oversold territory. This indicates recovering bullish momentum, although a break above 60 will further validate continuation toward higher targets. Currently, the RSI reflects a mild bullish bias.

3. Bollinger Bands: Reversal from Lower Band

Price has reversed after briefly touching the lower Bollinger band and is now approaching the mid-band area. The slope of the bands has started flattening after a contraction phase, which suggests a probable expansion in volatility. A close above the mid-band (Rs 99,300) can pave the way for a test of the upper band near Rs 100,300 – Rs 101,000.

4. EMA 8 & EMA 21: Attempting bullish crossover

EMA 8 (Red): Rs 98,700
EMA 21 (Yellow): ~₹98,600

Price has managed to regain both short-term exponential moving averages, indicating a shift in short-term trend. A potential bullish crossover between EMA 8 and EMA 21 in the coming sessions may add to the buying conviction. These EMAs will now act as support for dip-buying zones.

5. MACD: Early bullish divergence forming

MACD remains in negative territory but is showing signs of flattening and a possible crossover. The histogram is shrinking, suggesting a reduction in downside momentum. A confirmation above the signal line will strengthen the bullish bias.

Gold trading strategy

Buy on dips near Rs 99,400 with a stop loss of Rs 98,000 on a closing basis. Gold has regained momentum following softer US data and rising expectations of a rate cut in the next Fed meet. Traders may look to accumulate on dips toward Rs 99,400 with targets of Rs 100,300 and Rs 101,000.

Failure to hold Rs 98,000 on a closing basis would negate the bullish setup and bring Rs 97,400 – Rs 96,200 into focus.

Keep watch on US PMI numbers and RBI commentary to guide short-term direction, Trivedi said.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)