Precious metals depreciated last week following a rise in the dollar. In terms of dollars, gold and silver lost 1.8 and 7.4 per cent to end the week at $1,921.3 and $22.4 per ounce, respectively.

Similarly, on the Multi Commodity Exchange (MCX), gold futures declined 1.8 per cent to close the week at ₹58,307 (per 10 gram), whereas silver futures dropped 6.4 per cent to end at ₹69,104 (per kg).

The charts hint at more downside, going forward.

MCX-Gold (₹58,307)

Gold futures (August series) fell through the week. It marked a three-month low of ₹58,096 on Friday before wrapping up the session at ₹58,307. There is a small chance for the contract to see a bounce. But this could be limited, probably to ₹59,000.

Broadly, the trend is bearish, and we anticipate more fall in the coming days. The contract could touch ₹56,800, where the 200-day moving average lies currently. Subsequent support is at ₹55,800.

Trade strategy: Sell gold futures now at around ₹58,300 and add more shorts if the price rises to ₹58,900. Place initial stop-loss at ₹59,600.

When the contract slips below ₹57,500, tighten the stop-loss to ₹58,200. On a fall to ₹56,800, exit half of the short positions and tighten the stop-loss to ₹57,600. Liquidate the balance half at ₹55,800.

MCX-Silver (₹69,104)

Silver futures (September contract) saw a sharp decline last week following the arrival of fresh short positions. Consequently, it invalidated the support at ₹71,300. The contract then made a three-month low of ₹68,371 on Friday before closing at ₹69,104.

The price action hints at a fall to ₹65,000, which is the nearest notable support. In case there is a recovery from here before the eventual decline, the upside can be capped at the ₹71,000-71,300 price band.

Trade strategy: Go short on silver futures now and also on a rally to ₹71,000. Keep stop-loss at ₹73,000 at first. When the price falls below ₹67,500, modify the stop-loss to ₹70,000. Book profits at ₹65,000.

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