While both gold and silver gained last week, the latter outperformed the former by a significant margin. In terms of dollars, gold appreciated 1.3 per cent to end the week at $1,914.5 per ounce, whereas silver shot up 6.1 per cent to close at $24.4 an ounce.

Similarly, on the MCX, gold futures was up 0.5 per cent and silver futures rallied 4.8 per cent, as they closed at ₹58,640 (per 10 gram) and ₹75,011 (per kg) respectively.

MCX-Gold (₹58,640)

Although gold futures (October expiry) inched up last week, the overall trend remains bearish. It will remain so until the contract decisively breaches the barrier at ₹59,500.

So, we expect the contract to resume the decline either from the current level or after extending the upside to ₹59,000. Post this, the downswing can drag gold futures to ₹57,000.

Trade strategy: We suggested initiating a short position on gold futures at around ₹58,375 last week. Hold this trade and short more if the price rises to ₹59,000. Keep a stop-loss at ₹59,700.

When the contract slips below ₹58,000, tighten the stop-loss to ₹58,600. Further tighten the stop-loss to ₹58,000 when gold futures touch ₹57,500. Exit at ₹57,200.

MCX-Silver (₹75,011)

We expected a minor rally followed by a decline in silver futures. But contrary to this, the December contract saw a sharp rise. Having said that, from the current level, the scope of further rally looks limited because of a supply zone.

The contract faces a resistance band between ₹76,000 and ₹76,600. So, the contract could either fall from the current level of around ₹75,000 or after extending the upswing to ₹76,000. 

Such a decline can take the contract down to ₹73,000 quickly. A break of this support can pull the contract further down to ₹71,000.

Trade strategy: Considering the above factors, traders can short silver futures now at around ₹75,000 and add more shorts in case the price moves up to ₹76,000. Keep a stop-loss at ₹77,500. Book profits when the contract falls to ₹73,000.