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The precious metals ended last week largely on a flat note, in line with our expectations. Gold, in terms of dollar, closed at $1,989.7, up by a marginal 0.3 per cent.
On the Multi Commodity Exchange (MCX), the gold futures ended at ₹59,919 versus preceding week’s close of ₹59,845.
Silver, in dollar terms, ended last week without any change at $25.04. That said, the silver futures on the MCX was down 0.7 per cent as it closed the week at ₹75,419.
Charts of both metals indicate that the trend is likely to stay flat for some more time.
MCX-Gold (₹59,919)
The June gold futures was trading in a narrow range of ₹59,700-60,700 through the last week. Thus, as it stands, the contract does not exhibit any bias and the likelihood of a short-term movement on either side is the same.
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But one should keep in mind that the overall trend is bullish, and it will be negated only if the price slips below the support at ₹59,000. In such a case, it could decline to ₹58,000. In case the contract regains positive momentum, it could appreciate to ₹63,000.
Trade strategy: Since the support at ₹59,000 stays valid, hold on to the long positions taken at ₹60,511. Add more longs if the price softens to ₹59,500. Place stop-loss at ₹58,800. When the contract touches ₹62,000, tighten the stop-loss to ₹60,500. Book profits at ₹62,800.
MCX-Silver (₹75,419)
Silver futures, like gold futures, lack momentum and is not able to extend its recent rally. However, it has not fallen either. There is a good support at ₹72,000. The overall bullish inclination will only change if the price of July contract falls below the key support at ₹70,000.
We cannot reject the possibility of the contract resuming the rally. But at this juncture, there are no clear signs of it. In case there is one, the contract is likely to face resistance at ₹79,000 and ₹80,000.
Trade strategy: As the risk-reward ratio is unfavourable for both long and short positions, traders can stay away from trading silver futures.
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