Daily Wealth – Why Gold Fell?


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Sesa Goa shows very good pattern. Buy Sesa Goa at current level for target price of 182-190.



Nifty found support and climbed up. But, strength is still dubious. It closed almost where it opened. Hence, I will wait till it closes above 5730 to initiate fresh long positions.

2nd Nov Update:

Nifty could manage to close above 5640. Let us see the strength, Nifty shows in coming days. Yes, trend is up and Nifty should show significant strength. If Nifty sustains above 5640, Nifty can test 5730 again. All would depend on the strength with which Nifty takes out 5730. If Nifty slips, should find support around 5575-5590 band.

Fundamentally Sound and Technically positive stocks: Sintex, Crompton greaves, Educomp, Force Motors, NMDC, TCI ( Transport Corporation of India ), Tecpro systems. I will keep revisiting this list.


Rupee has almost topped out but since Dollar has started strengthening, Rupee will fluctuate between 53.50 to 54.50 for some time. I do not expect, Rupee to slip down to 56-57 as Rupee did in past when Dollar went up.


Why Gold Fell?

Gold was trading in range and had been in range since mid of September. GDP and Jobs data of US were on improvement since then. The sudden improvement of Jobs data was catalyst for Gold’s sudden fall.

Market participants and traders believed that if Jobs data improves and GDP continues to improve as it improved in last quarter above expectation, then US will stabilise, Govt’s revenue will increase and issuance of Fed T-bill will reduce and hence Dollar will go up. When Dollar goes up, inflationary expectations come down and hence God should fall !!

But, this is mere daydream. Gold is far from being topped out. I expect this downturn to continue for some time and may be till Jan, 2013. But, rest assured, US will fall further before sustainable recovery and Fed will continue to print as it has been doing since last 4 years and dollar too will continue to slip down. This is temporary downturn.

The sad thing is, this sharp downturn will shake Gold holders from within and most of them will abandon their positions. Stay tune to my updates.

Update for 5th Nov.

I had objectively warned on 1st Nov that do not create fresh long untill Gold closes above $1775. Gold dropped $ 40 on 2nd Nov. If Gold does not find support in the lower range of 2nd Nov that is $1674 to $ 1680 on Monday and closes below $ 1674, Gold will come down to 1620 and may be further down to find support around $ 1550. Hence be cautious. Those, who are on sidelines can use the opportunity to short gold on higher levels.

In Indian price, Gold has first support range 29000-29400. On further slippage, Gold will find support around 27500. I will wait for Gold to close below 30380(Dec Contract) to build short position.

If Rupee slips further below 54.20, Gold will fall less than expected.

Update issued on 2nd Nov:

Gold has continued to retrace the fall. Gold should try to take out 1740 resistance. Those, who are sideways or seeking fresh long positions, do not create fresh long positions until Gold closes above $ 1775.

In Indian rupee, Gold looks ready to climb up to the level of 31300 to 31500 area.


Silver will continue to follow Gold.


I will remain sideways. Will update as opportunity arises.


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Dhaval Shah

Blog: https://investmentacademy.wordpress.com/

Disclaimer: Daily Wealth is a free daily investment newsletter published by Investment Academy. This publication does not provide individual, customized investment or trading advice. All information is based upon data whose accuracy is deemed reliable, but not guaranteed. Performance returns cited are derived from our best estimates, but hypothetical as we do not track actual prices of customer purchases and sales. Author might have open positions in the stocks and Indices recommended above.


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