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Gold was largely flat last week. In terms of dollars, spot gold closed $1,864.3 an ounce on Friday compared with $1,865.5 by the end of the preceding week. On the Multi Commodity Exchange (MCX), gold futures (April expiry) closed at ₹56,741 (per 10 gram) – 0.3 per cent higher than the previous week’s close of ₹56,585.
Silver underperformed gold as expected. In dollar terms, the spot silver lost 1.5 per cent to end the week at $22.01 per ounce. Similarly, in the domestic market, the silver futures (March contract) went down 1.3 per cent to end the week at ₹66,664 (per kg).
The charts indicate that both precious metals could see further softening of prices this week.
MCX-Gold (₹56,741)
The April gold futures, which rallied in the first half of the week, gave up the gains later to end on a flat note. However, the short-term bias is bearish, and we could see a fall from here.
While the nearest support is at ₹56,120, it is a minor one. Subsequent support is at ₹55,400. The contract is likely to touch this level in the near term. On the upside, resistance levels are at ₹57,500 and ₹58,800.
Trade strategy: We suggested selling at ₹56,585 last week. Hold this short. Add more shorts if the price rises to ₹57,500. Keep the stop-loss at ₹58,200. Modify this to ₹56,800 when the price drops below ₹56,000. Exit at ₹55,400.
MCX-Silver (₹66,664)
The March silver futures closed below the support at ₹67,000 last week and now, the contract appears weaker. We can expect further drop in price this week. The nearest support levels from here are at ₹64,000 and ₹62,200. The 200-day moving average lies at ₹62,400, thereby making the price band of ₹62,200-62,400 a good support.
On the other hand, the contract has resistances at ₹67,000 and ₹70,000. Only a clear breach of ₹70,000 can turn the outlook positive for the silver futures.
Trade strategy: Hold the short that we recommended last week at ₹67,576 with a stop-loss at ₹70,500. Tighten the stop-loss to ₹67,500 when price slips below ₹66,000. Further, alter the stop-loss to ₹66,000 when price touches ₹65,000. Exit the shorts at ₹64,200.
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