Outlook: Gold to dance to currency’s tunes

Rajalakshmi Nirmal | Updated on November 24, 2017

In the domestic market, gold and silver futures contract traded on the MCX put up a lacklustre show last week despite a weak rupee. The Indian currency dropped from 60.17 versus the US dollar to 60.29. The rally in the stock markets failed to enthuse the rupee, which remained subdued due to weak economic data.

MCX gold closed at ₹28,505 down 0.8 per cent after hitting a high of ₹28,986 by crossing the key resistance at ₹28,800. MCX Silver future was down by around 2 per cent at ₹42,377.In the coming week, if the rupee slides further, MCX gold may move past ₹29,000. Supports are at ₹28,000 and ₹27,800. The medium-term trend will turn bullish only beyond ₹30,000.

MCX Silver (₹42,377) future declined sharply as predicted. With the contract close to a key support at ₹42,300, it is advisable to trade with stop loss. Weakness in rupee may help the contract move to ₹43,000 in the coming week, but downside target of ₹42,300 and ₹42,000 is still open.

Next week, there are a host of data releases in the US. On Tuesday, the new home sales data and on Thursday, the weekly jobless claims number and durable goods orders will be announced.

Speculators may be closing their long positions in gold with Russia agreeing to remove illegal military troops from Ukraine in a deal in Geneva last week.

However, with the metal having cut the indicated first target $1,328, there is possibility of a breakout.

If it cuts $1,330 in the coming week, it can go further up. On the downside, the levels are $1,284 and $1,277.

Published on April 20, 2014

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