Despite the intraweek volatility due to the US jobs number, the bullion did not see considerable swing in price. In the global spot market, gold ended the week flat at $1,850.8 per ounce compared to $1,852.7 by the end of the preceding week. Silver, on the other hand, lost nearly 0.9 per cent as it closed at $22.91 per ounce as against $22.1 a week back.
On the Multi Commodity Exchange (MCX), gold futures (August expiry) was almost flat by closing at ₹50,970 (per 10 grams) versus ₹51,050 a week back. Silver futures (July series) depreciated by 0.7 per cent and closed at ₹61,669 (per kg) versus ₹62,116.
MCX-Gold (₹50,970)
The August futures of gold on the MCX wrapped up the week marginally lower at ₹50,970 against the previous week’s close of ₹51,050. The movement during the first half of the week could have meant more depreciation but a recovery towards the end of the week did the damage limitation job. That is, after declining to mark an intraweek low of ₹50,415, the gold futures pared losses to close at a higher level.
However, the contract is trading below the crucial resistance at ₹51,400; to be precise the resistance band of ₹51,400-51,600. The 50-day moving average (DMA) coincide at ₹51,600. Until these levels are breached, the bias will be bearish. From here, the price could drop to the prior low of ₹50,415. Below that level, the support is at ₹50,000. Subsequent support is at ₹49,640 where the 200-DMA lies currently.
Nonetheless, a breach of ₹51,600 can turn the trend bullish where the contract can rally to ₹53,000 quickly.
MCX-Silver (₹61,669)
Like gold futures, the silver futures (July expiry) too depreciated last week till Wednesday. But then, after making a low of ₹60,502 the contract rebounded and ended the week at ₹61,669. It had closed at ₹62,116 before a week.
While the broad range of ₹58,000-74,000 still holds true, the contract seems to have formed a range within these levels. That is, the contract now looks to be held in the range of ₹60,500-63,000. So, a break of this range can give us the next leg of trend. Below ₹60,500 the support is at ₹58,000. Note that a breach of ₹58,000 can result in the contract swiftly declining to ₹55,000 and probably to ₹52,000. A breakout of ₹63,000 can lead to a rally towards ₹65,000 – a resistance level. Above this, ₹66,800 is a hurdle.
As silver futures rebounded from the lower end of the broad range i.e., at ₹58,000 in mid-May, we suggested long positions. That is, we advised to buy at around ₹61,400 with initial stop-loss at ₹57,500. One can hold this position.
When the contract rallies above ₹65,000 shift the stop-loss to ₹61,000. Then tighten it further to ₹64,000 when price touches ₹66,800. Exit the longs at ₹72,000.