The World Gold Council (WGC) released the gold demand trends last week. Overall, there was a marginal increase in the total demand in the second quarter of this calendar year. According to the latest data, the demand went up by about 5 per cent to nearly 1,193 tonnes in Q2. This is primarily because of jewellery demand which was up 6 per cent to 484 tonnes. However, the investment demand dropped 28 per cent to nearly 206 tonnes as gold prices were on a decline in that quarter.

That said, bullion rallied last week, largely driven by a weak dollar. Gold and silver in the international spot market appreciated 2.3 per cent and 9.3 per cent to end the week at $1,765.2 and $20.32 per ounce, respectively. Gold witnessed its biggest weekly gain since the final week of February, whereas silver posted its first weekly gain in the last nine weeks.

In the domestic market too, both gold and silver moved northwards. Gold futures (October expiry) on the MCX (Multi Commodity Exchange) went up 1.5 per cent to end the week at ₹51,626 (per 10 gram) and silver futures (September series) gained 5.9 per cent as it wrapped up the week at ₹58,370 (per kg).

But going ahead, both gold and silver face strong hurdles on the chart and the bulls could struggle to keep up the pace.

MCX-Gold (₹51,626)

Although gold October futures on the MCX rallied, it continues to stay within the range of ₹50,000-52,000. Immediately above ₹52,000 lies the resistance at ₹52,600. Therefore, until the contract breaches ₹52,600, we cannot call the trend bullish and similarly, it should break down below ₹50,000 to turn the short-term outlook bearish. Until then, the next leg of trend will remain uncertain and the price movement within the range will not have much of a significance.

If gold futures extend the gain this week and break out of ₹52,600, it can rise to ₹54,000 and then possibly to ₹55,000, the nearest barriers. On the other hand, if the contract declines below ₹50,000, it can drop to ₹47,700, the nearest support. Subsequent support is at ₹46,000.

Silver rally
If the contract moves past ₹60,000-mark, it can see another leg of a rally, possibly to ₹63,500
MCX-Silver (₹58,370)

The silver futures (September expiry), which has been on a downtrend since the past three months, bounced off the support at ₹55,000 and produced a strong rally. It snapped an eight-week loss by gaining 5.9 per cent in the last week. Thus, it has closed in on the resistance band of ₹58,500-60,000.

If the contract moves past ₹60,000-mark, it can see another leg of a rally, possibly to ₹63,500 from where there could be a minor correction. Resistance above ₹63,500 is at ₹65,000 where the 200-day moving average coincides.

But if the contract starts to fall on the back of the above-mentioned resistance band, it can retest the support at ₹55,000. If this level is breached, price could see a swift drop to ₹52,000.