Bullion Cues: Gold and silver struggle to find direction

Akhil Nallamuthu |BL Research Bureau | Updated on: Feb 05, 2022

Gold and silver futures retain their sideways range

Gold inched up last week as the dollar saw a decline throughout the week. However, silver underperformed the yellow metal and ended the week flat. In the international market, spot gold price gained bearly 1 per cent to close at $1,807.5 an ounce, whereas spot silver closed flat at $22.48 an ounce.

Similarly, on the Multi Commodity Exchange (MCX), the gold futures (April expiry) appreciated by 0.7 per cent to end the week at ₹47,924 (per 10 grams) and silver wrapped up the week largely unchanged at ₹60,849 (per kg).

That said, investors seemed to be a bit positive on the yellow metal in January as the global gold ETF (Exchange Traded Fund) holding increased to 3,610 tonnes by the end of final week of January compared to 3,570 tonnes by December-end — an increase by about 40 tonnes.

MCX-Gold (₹47,924)

The April futures of gold on the MCX rebounded on the back of the support at ₹47,400 and posted a gain of 0.7 per cent last week. Nonetheless, the contract continues to remain within the range of ₹47,400-48,550. Until either of these levels are breached, we recommend participants to abstain from entering new trades.

A breakout of ₹48,550 can turn the near-term outlook positive wherein the contract can rally to ₹50,000. However, from the current levels, ₹48,300 can also be a hurdle. On the other hand, a breach of the support at ₹47,400 can invite fresh sellers which can drag the contract to ₹46,800 and ₹45,920.

MCX-Silver (₹60,849)

Silver futures March series witnessed a mid-week sell-off and hit an intra-week low of ₹59,951. But the support at ₹60,000 arrested the decline. Yet, there was no significant bounce as the contract closed the week almost flat at ₹60,849 versus the preceding week’s close of ₹61,034. While ₹60,000 is a crucial support, the contract has resistance at ₹61,850 and a critical one at ₹62,500. So, we can assume the next leg of trend only if ₹60,000 or ₹62,500 is broken decisively. Until then, traders can remain on the sidelines.

If the contract breaks below ₹60,000, it can find immediate support at ₹57,800. Subsequent support can be spotted at ₹55,850. But if it rallies past ₹62,500, there will be hurdles at ₹64,000 and ₹65,000.

Published on February 05, 2022
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