The precious metals gained last week on dollar weakness. Gold appreciated 2.3 per cent to end the week at $1,980.9 per ounce, whereas silver gained 6.8 per cent to close at $23.7 an ounce.
Similarly, gold futures on the MCX was up 1.8 per cent and silver futures gained 4.4 per cent and closed the week at ₹60,713 (per 10 gram) and ₹73,140 (per kg) respectively.
Gold futures (December contract) bounced off the support at ₹59,500 last week. On Thursday, it made an intraweek high of ₹61,914 before closing at ₹60,713 on Friday.
The prevailing price action gives a bullish bias as the contract has closed above ₹60,000. The nearest resistance levels can be spotted at ₹61,500 and ₹62,000.
On the other hand, the contract has its nearest support at ₹60,000. Subsequent support is at ₹59,500. Note that there is a small chance for gold futures to oscillate between ₹59,500 and ₹61,500 in the short term.
Trade strategy: Going ahead, gold futures might see a minor decline to ₹60,000 and then see a rally to ₹61,500.
So, traders can buy gold futures when the price falls to ₹60,100. Target and stop-loss can be at ₹61,500 and ₹59,300 respectively.
Silver futures (December series) rebounded from the support at ₹70,000 and rallied through last week.
However, unable to surpass the resistance at ₹73,600, the contract closed at ₹73,140 on Friday after making an intraday high of ₹74,000.
If ₹73,600 is taken out, it can trigger a rally to ₹76,500. But if silver futures fall off the barrier at ₹73,600, the price might dip to ₹71,000. Above this level, there is a minor support at ₹71,400.
Trade strategy: Stay out for now. Initiate fresh long positions if silver futures break out of the resistance at ₹73,600. Target and stop-loss for this trade can be at ₹76,500 and ₹71,900 respectively.