The precious metals’ price surged last week and produced the best weekly performance since the third week of March this year. In terms of dollars, gold and silver appreciated over 5 per cent each and ended at $1,932.8 and $22.7 per ounce, respectively.

Similarly, on the MCX, gold and silver futures rallied 4.5 per cent each and closed the week at ₹59,408 (per 10 gram) and ₹71,287 (per kg) respectively.

MCX-Gold (₹59,408)

Gold futures (December contract) rallied sharply and moved above a resistance at ₹58,700. While the momentum appears strong, the contract has a couple of strong resistance. One is the falling trendline resistance at ₹59,600, where the 200-day moving average also coincides. The other one is at ₹60,000.

A breakout of ₹60,000 can lead to another leg of rally, possibly to ₹61,500. On the other hand, if there is a decline, the immediate support is at ₹58,700. A breach of this can bring back the bearish sentiment, possibly dragging the contract to ₹57,500.

Trade strategy: Although the bullish momentum is strong, gold futures is facing a barrier ahead. Moreover, the risk-reward is unfavourable for fresh long positions at this juncture. Hence, we advise staying out.

MCX-Silver (₹71,287)

Last week’s rally led to silver futures (December) closing above the resistance band of ₹70,000-71,000. Compared with gold futures, which has a resistance nearby, silver futures is better placed to rally as it has crossed over the hurdles.

The nearest notable resistance from the current level is at ₹73,500. Subsequent resistance is at ₹76,500. In case silver futures makes a U-turn and falls below ₹70,000, it might decline to ₹68,200. Next support is at ₹66,600.

Trade strategy: Traders with high-risk appetite can buy silver futures now at ₹71,287 and add longs if the price dips to ₹70,000. Target and stop-loss for this trade can be at ₹73,500 and ₹69,200, respectively.

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