Strong dollar continues to be a concern for the bullion as the prices of gold and silver declined last week. Dollar is now trading at a crucial level and there is a possibility for it to see some moderation, at least in the short term. So, further decline in bullion prices might not occur in the next one or two weeks.

In the global spot market, gold fell by 1.7 per cent to end the week at $1,897.3 per ounce whereas silver depreciated by 5.6 per cent to close at $22.79 an ounce.

Similarly, on the Multi Commodity Exchange (MCX), gold futures dropped nearly 1 per cent and silver futures declined by 4.5 per cent to end the week at ₹51,754 (per 10 grams) and ₹64,349 (per kg) respectively.

MCX-Gold (₹51,754)

The June futures of gold on the MCX was on a decline for most part of the week. Although it made some recovery on Friday, it ended the week with a loss of nearly 1 per cent. The contract recovered after making a low of ₹50,828 and thus, the support at ₹50,800 holds true. That also means the trend has not turned bearish and the gold futures might appreciate from here. It could face hurdles at ₹52,700 and ₹53,600.

Since it made a low of ₹50,828 last week, our longs would have hit the stop-loss at ₹51,000. But because the trend has not turned bearish and the risk-reward ratio looks good, traders can initiate fresh long positions. That is, buy at current level of ₹51,750 with stop-loss at ₹50,700. This is a short-term trade. Tighten the stop-loss to ₹51,600 when the contract surpasses resistance at ₹52,700. Liquidate the longs at ₹53,600.

MCX-Silver (₹64,349)

Silver futures (July expiry) broke below the key supports at ₹66,800 and ₹65,000 and posted a loss of 4.5 per cent last week to close at ₹64,349. The nearest support is at ₹62,500 below which the price band of ₹60,000-60,700 can act as a support band. Ideally, the breach of ₹65,000 should attract more sellers reinforcing the downward momentum. However, the gold/silver ratio is now at a critical resistance. That gives room for the silver to outperform gold in the short run. But the contract could fall to ₹62,500 before making a recovery.

So, traders can initiate fresh longs in silver futures when price declines to ₹62,500 with a stop-loss at ₹60,800. Liquidate the longs when price rises to ₹66,000. Note that this is a short-term position and so, stick to the stop-loss and target levels strictly. The reaction of the contract to the key level of ₹66,800 should be closely monitored for further positions.

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