Just when the bullion looked ready to gain traction, the bears made a comeback and dragged both gold and silver down. Gold, in the international spot market, lost 3 per cent to end the week at $1747.1 an ounce. Similarly, silver was down by 8.5 per cent for the week as it closed at $19.05 an ounce.

Likewise, in the domestic market, gold futures (October expiry) on the MCX (Multi Commodity Exchange), depreciated 2.1 per cent and ended at ₹51,479 (per 10 grams). Silver futures (September series) on the MCX lost 6.4 per cent to close the week at ₹55,496 (per kg).

The decline in the bullion was largely due to a strong rally in the US dollar. After moderating over the past one month, the dollar seems to be gaining traction and a further rally is likely. This means, both gold and silver can face further downward pressure going ahead.

MCX-Gold (₹51,479)

Contrary to our prediction last week, gold futures on the MCX did not break out of the range of ₹50,000-52,600. In fact, the contract faced a sell off on the back of the resistance at ₹52,600 and it closed the week at ₹51,479 versus the preceding week’s close of ₹52,585.

There is high likelihood of seeing a decline towards the range bottom of ₹50,000.

But note that until the range of ₹50,000-52,600 is decisively breached on either side, the next trend will remain uncertain. So, the movement back and forth between both ends of the range is what we expect to continue, at least in the coming week.

In case if the bears drag the contract below ₹50,000, the contract can be expected to drop to ₹47,700 – the nearest support. Subsequent support is at ₹46,000. But if gold futures manage to move above ₹52,600, a low probability event, during this week, it can rally to ₹54,000 and then potentially to ₹55,000.

MCX-Silver (₹55,496)

As we cautioned last week, the rally in silver futures looked weak. Also, it faced the 50-day moving average (DMA) resistance at around ₹59,250. Consequently, the contract dropped 6.4 per cent to end the week at ₹55,496 compared to the previous week’s close of ₹59,276.

This week, the silver futures could see a further drop. But there is support at ₹54,200. In case if the support holds, the contract might stay within ₹54,200 and ₹58,500 this week. But if ₹54,200 is breached, we might see a decline to ₹52,000.

On the other hand, if the contract rallies past the resistance band of ₹59,500-60,000, the short-term trend will turn bullish. The price will then possibly move to ₹63,500.

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