Gold and silver continued to face the heat from a rising dollar. Both precious metals declined over the last week and now look set to fall further.

In terms of dollars, gold and silver depreciated 1.5 per cent and 2.1 per cent to end the week at $1,946 and $23.3 per ounce, respectively. Similarly, on the Multi Commodity Exchange (MCX), gold futures lost 2 per cent and silver futures lost 2.9 per cent to close the week at ₹59,560 (per 10 gram) and ₹71,229 (per kg), respectively.

MCX-Gold (₹59,560)

The sell-off in the second half of last week resulted in the August futures of gold on MCX drop below the key support at ₹60,000. Thus, the trend has turned bearish for the short term and we might see more declines in the coming sessions.

Considering that the price action on the daily chart resembles a confirmed double-top pattern, the indication is that the contract could fall to ₹58,000. But if there is a rally from the current level, chances for it to extend above ₹61,000 is less likely.

Trade strategy: Short gold futures at the current level of ₹59,560. Add more shorts in case the price rises to ₹60,000. Keep initial stop-loss at ₹61,000.

When the contract touches ₹58,500, tighten the stop-loss to ₹59,500. Book profits at ₹58,050.

MCX-Silver (₹71,229)

The July silver futures closed below an important support at ₹72,000 last week, showing that the downward momentum remains strong. Looking at the chart, the probability of a fall to ₹67,300 appears high. Although there is a support at ₹70,000, it may not be able to stop the bears.

If the contract recovers, it will face barriers at ₹72,000 and ₹73,000. The chances are low for a rally past ₹73,000 this week.

Trade strategy: Sell silver futures now at ₹71,229. In case the price inches up to ₹72,000, add more short positions. Place stop-loss at ₹73,200 initially. Shift it down to ₹70,000 when the contract falls to ₹68,500. Exit the shorts at ₹67,500.