Bullion, in terms of dollar, posted gain as the greenback saw some moderation last week. The international spot price of gold and silver was up by about 2.4 per cent each last week as it ended $1,855 and $21.24 per ounce, respectively.
That said, the performance of precious metals was weaker in rupee terms as the Indian currency appreciated by nearly 1 per cent against the dollar last week. In fact, silver futures saw a minor drop. Gold futures on the Multi Commodity Exchange (MCX) gained 0.5 per cent to end the week at ₹55,721 (per 10 gram). Silver futures, on the other hand, was down 0.2 per cent and closed at ₹64,401 (per kg).
The support at ₹55,400 held well last week as the April gold futures rebounded from this level. However, the contract remains between the resistance at ₹56,400. Until it stays so, the trend will not turn bullish. Similarly, until the support at ₹55,400 stays true, the bears cannot extend the downside.
Therefore, the contract is more likely to stay in the price band of ₹55,400-56,400 this week. The next trend will depend on the direction of the break of this range.
The immediate resistance above ₹56,400 is at ₹57,500, whereas the nearest support below ₹55,400 is at ₹54,400.
Trade strategy: Stay out for now. Go long with stop-loss at ₹55,900 if the contract rallies past ₹56,400. Target can be ₹57,500. But if the price falls below ₹55,400, go short with stop-loss at ₹56,000 for a target of ₹54,400. Note that the above trades are very short-term alternatives.
Last week, after beginning the session below the support at ₹64,500, the May silver futures largely remained subdued all through the week. Thus, a bearish bias exists in silver futures. This will be negated only if the contract moves above the 21-day moving average, which currently lies at ₹66,600.
We anticipate the price to fall further, possibly to ₹63,000. If this support is breached, the contract can be dragged lower to ₹60,000. On the other hand, if the contract rebounds it might rally to ₹67,500.
Trade strategy: We suggested short positions below ₹64,500 with stop-loss at ₹65,250. Hold this position and book profits at ₹63,000.
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