Gold outperformed silver over the past week in terms of dollar as well as in the domestic market. Gold and silver ended at $1,939 and $24.2 per ounce respectively in the international market. While the former gained 1.3 per cent, the latter was down 0.2 per cent.
On the MCX, gold futures rallied 1.3 per cent to end the week at ₹59,395 (per 10 gram), whereas silver futures was largely flat and closed at ₹75,089 (per kg).
As we expected, gold October futures extended the upswing last week but remained below the resistance at ₹59,500. Until this holds, the overall bias will be bearish.
In the upcoming sessions, we expect the gold futures to fall. The downtrend can drag the price to ₹58,300 at first and then possibly extend to ₹57,000.
On the other hand, if the hurdle at ₹59,500 is breached, expect a swift rally to ₹60,300. But at the moment, the resistance at ₹59,500 stays true and so, we anticipate a decline.
Trade strategy: We suggested initiating short positions on gold futures at an average price of ₹58,688. Retain the trade with stop-loss at ₹59,700.
When the contract slips below ₹58,300, tighten the stop-loss to ₹58,800. Further tighten the stop-loss to ₹58,000 when gold futures touch ₹57,500. Exit at ₹57,200.
Silver December futures saw a rally mid-week and marked an intraweek high of ₹77,200. However, it did not sustain, and the contract fell to close at ₹75,089. Thus, the resistance band of ₹76,000-76,600 remains valid.
From the current level, the contract is likely to decline. While the nearest support is at ₹73,000, silver futures might slip below this level and touch ₹71,000. On the other hand, if the contract decisively breaks out of ₹76,600, it will significantly increase the odds of an upswing to ₹80,000.
Trade strategy: We recommended selling silver futures at an average price of ₹75,500 with stop-loss at ₹77,500. Hold this trade.
When the price falls to ₹73,000, exit half of the shorts and modify the stop-loss to ₹74,500 for the remaining positions. Exit them at ₹71,800.