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Gold and silver posted a loss last week. In terms of dollars, gold lost 1.1 per cent to close the week at $1,982.9 per ounce, whereas silver was down 1.5 per cent to end the week at $25.03 an ounce.
Similarly, gold futures on the Multi Commodity Exchange (MCX) depreciated 0.8 per cent to wrap the week at ₹59,845 (per 10 gram). Silver futures on the MCX was down 1.4 per cent to end the week at ₹74,654 (per kg).
Nevertheless, from a broader picture perspective, both precious metals seem to have entered a consolidation phase and we might have to wait for some time to see the next leg of trend. That said, the overall bullish trend is not negated yet.
MCX-Gold (₹59,845)
The June gold futures is now trading in the narrow ₹59,700-60,700 range. But note that the short-term bullish stance will change only if the price falls below the support at ₹59,000.
In case the price slips below ₹59,000 we might see a swift fall to ₹58,000 – the next nearest support. But if the contract regains traction and starts moving up from here, there is potential to touch ₹63,000.
Trade strategy: Since the support at ₹59,000 stays valid, retain the longs taken at ₹60,511 two weeks ago. Add more longs if the price softens to ₹59,500. Place stop-loss at ₹58,800. When the contract touches ₹62,000, tighten the stop-loss to ₹60,500. Book profits at ₹62,800.
MCX-Silver (₹74,654)
Silver futures dropped for the first time in the last six weeks as the May contract lost 1.4 per cent. However, it remains above the support band of ₹71,500-72,000 and so, the uptrend stays valid.
If the contract resumes the rally from here, it might appreciate to ₹78,000. There is also a possibility of it gaining to ₹80,000. On the other hand, if the corrective decline extends, it might touch ₹71,500. But note that a break below ₹71,500 can turn the near-term outlook bearish. Support below ₹71,500 is at ₹68,500.
Trade strategy: As the risk-reward ratio is unfavourable for both long and short positions, traders can stay away from trading silver futures.
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