The Russian invasion of Ukraine brought a sense of fear in the market, resulting in the demand for safe havens. Gold being one, saw its price surging during the week. However, the panic did not sustain resulting in a sharp pull back in the prices on Friday.

Nevertheless, there are supporting factors such as speculators creating positions and ETF (Exchange Traded Funds) flows which are showing positive signs. The net longs on the COMEX, according to Commodity Futures Trading Commission (CFTC) data, has been increasing over the past few weeks. It stood at 755 tonnes as on February 22, 2022, compared to 590 tonnes on February 1. On the other hand, global ETF inflows for the year, as on February 18, is at 69.3 tonnes according to the data by World Gold Council (WGC). The WGC also expects the demand in China, the largest consumer of the yellow metal, to improve in 2022. But irrespective of all this, the geo-political developments are seen as the biggest influencer on bullion prices in the short-term.

Spot gold ($1,887.6)

Although spot gold in the international market hit a fresh one-year high of $1,974.5 an ounce on Thursday, it gave aways the gains and ended the week at $1,887.6 which is slightly lower compared to preceding week’s close of $1,897.9. While the short-term trend is still bullish, one need to be cautious of a corrective decline. This is supported by the formation of an inverted hammer candlestick pattern on weekly chart. Nevertheless, $1,870 is a support which can help the bulls. But a break below this level will open the possibility of the price dropping to $1,830. A breach $1,830 is highly unlikely since this is a strong support. Also, there is a rising trendline, a dynamic support, which can prevent a fall below this. On the other hand, if the rally resumes from here, it can face a hurdle at $1,910. A breakout of this level can lift gold to the price band of $1,960-1975 in the near-term. Subsequent resistance is $2,000 – a psychological level.

MCX-Gold (₹50,221)

The April futures of gold on the Multi Commodity Exchange (MCX) spiked last week to mark a fresh one-year high of ₹52,797 per 10 gm. But the contract made a U-turn and dropped on Friday to end the week at ₹50,221, slightly higher compared to preceding week’s close of ₹50,112. While the contract remains above the key level of ₹50,000, a pin bar on the weekly chart suggests some weakness at higher levels. A fall below ₹50,000 can pull the contract down to the support band of ₹48,800-49,000. Whereas a rally could face hindrances at ₹52,250 and ₹56,000.

For the longs that we recommended a couple of weeks back at ₹49,100, we suggested to exit one-third of the positions at ₹52,000 and carry the remaining for ₹56,000. The revised stop-loss for this would be now at ₹49,900. Considering current volatility, we advise to widen the stop-loss a bit to ₹49,500 and carry the longs and look for the target of ₹56,000. Do not initiate fresh positions on either side until more clarity emerges on the price action front.

Spot silver ($24.19)

Gaining from the precious metal tag, silver prices jumped last week on the back of geo-political developments. The price of spot silver hit a fresh six-month high of $25.62 an ounce last Thursday. However, it depreciated sharply on Friday to close the week at $24.19. It seemed to have faced a stiff resistance at $25.4 and going forward, until this resistance stays valid, the trend will remain in a broad sideways range. The price band of $21.5-22 is a strong support band which is less likely to be breached. Above this, $23.25 can act as a support. But on the other hand, if silver regain traction and surge above $24.50, it might rally to $26.7 quickly. It could even extend the upswing to $28.5.

MCX-Silver (₹64,023)

The March silver futures on the MCX was moving upwards for most part of the week. It soared to hit a fresh three-month high of ₹68,097 per kg on Thursday. Nonetheless, it witnessed a considerable drop in price, ending the week at ₹64,023 as against the previous week’s close of ₹63,902. Although it closed above the key level of ₹62,500, a close above either ₹65,500 or ₹68,000 would have provided the bulls enough strength to push the price further north. Whatsoever, the near-term trend retains the bullish bias since the support at ₹62,500 holds. However, the prevailing higher volatility makes the job harder for traders. So, we recommend staying out of the market for now. A break below ₹62,500 can drag the contract to ₹61,500 and possibly to ₹60,000 whereas a rally is likely to face resistance at ₹65,000 and at the price band of ₹67,000-68,300.

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