The precious metals have posted back-to-back weekly gains in terms of dollars as well as in rupee terms. Gold and silver rallied on the back of the safe haven demand as the geopolitical tensions in West Asia is driving investors to safety.

The spot price of gold rallied 2.5 per cent to close the week at $1,981 per ounce, whereas the spot price of silver was up 3.1 per cent last week as it ended at $23.4 per ounce on Friday.

Similarly, on the Multi Commodity Exchange (MCX), gold futures appreciated 2.2 per cent and silver futures went up 2.3 per cent to wrap up the week at ₹60,736 (per 10 gram) and ₹72,909 (per kg) respectively.

MCX-Gold (₹60,736)

Gold futures (December contract) eased through the hurdle at ₹60,000 and marked a five-month high of ₹61,124 on Friday. Although the price moderated from the recent high, the contract managed to close above the ₹60,000-mark, a bullish sign.

While the nearest resistance is at ₹61,500, gold futures can extend the upside to ₹62,500 as the momentum appears strong. A breach of ₹62,500 can lift the price to ₹65,000.

On the other hand, if there is a fall from the current level, it is likely to be arrested by the support at ₹60,000. But if this level gives up, the contract could moderate further to ₹59,000, where the 50-day moving average coincides. A break below ₹59,000 is unlikely to occur this week.

Trade strategy: Although the trend is bullish, the risk-reward is unfavourable at the moment. Hence, traders can wait for the contract to dip to ₹60,000 and then go long. Accumulate longs in case the price drops further to ₹59,200. Place initial stop-loss at ₹58,800.

When the contract touches ₹61,500, tighten the stop-loss to ₹60,700. Book profits at ₹62,400.

MCX-Silver (₹72,909)

Silver futures (December contract) opened last week on a muted note. In fact, it ended with a minor loss on Monday. However, it rebounded strongly on Tuesday and it ended at ₹72,909 on Friday versus the preceding week’s close of ₹71,287.

On Friday, it hit a three-week high of ₹73,599 before closing the session a little lower. Note that the 200-day moving average lies at ₹73,530 now and it can act as a resistance.

If silver futures break out of this level on the back of the prevailing momentum, it can extend the rally to ₹76,500, a barrier. Subsequent resistance is at ₹78,000.

But if the contract declines from here, it has support at ₹71,000 and ₹70,000. A breach of ₹70,000 is not likely to happen this week.

Trade strategy: Even though the trend is bullish, traders can stay away as silver futures face a resistance between ₹73,500 and ₹73,600.

Go long in case the contract surpasses ₹73,600-mark. Target and stop-loss of this trade can be at ₹76,500 and ₹71,900 respectively.

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