Gold ($3,038/ounce) was down 1.5 per cent last week whereas silver ($29.60/ounce) slumped 13.2 per cent.
Similarly, in the domestic market, gold futures (₹88,075/10 gm) and silver futures (₹87,211/kg) lost 1.8 per cent and 13.2 per cent respectively last week.
MCX-Gold (₹88,075)
Gold futures (June), which made an intra-week high of ₹91,423 on Thursday, saw its price drop considerably in the last two sessions.
Nevertheless, it managed to close above the support at ₹88,000. Notably, the price band of ₹86,800-88,000 is a support band.
A breach of ₹86,800 can turn the near-term outlook bearish where the gold futures can drop to ₹85,000 and ₹82,000.
But if the uptrend resumes, the contract will face resistance at ₹91,400. A breach of this can lift the contract to ₹92,000 and ₹95,000.
Trade strategy: The broader trend remains bullish, but the recent price action gives gold futures bearish inclination. As there is no clarity with respect to the trend for this week, we suggest staying out.
MCX-Silver (₹87,211)
Silver futures (May) declined through the last week. It experienced significant selling pressure, particularly on Thursday and Friday.
The contract lost the gains it made over the last three months in just one week, indicating the strength of downward momentum.
From the current level, the nearest support is at ₹86,800 and ₹85,000. Subsequent support is at ₹82,500.
In case the contract moves up from the current level, it can face barriers at ₹89,000 and ₹92,000. Only a rally above ₹92,000 can bring back the bullishness.
Trade strategy: Since the contract saw a steep fall in price over the past week, it might witness a corrective rally this week. However, the likelihood and the magnitude of it is uncertain. Therefore, participants can stay out.