After a strong performance in April, precious metals remained largely range-bound in May.

The mixed flow of economic data in the U.S. and the expectations regarding the possibility of an interest rate cut by the U.S. Federal Reserve played a role in influencing precious metals prices in May. While the Comex gold price did not move much last month, the silver price showed a lot more traction to the upside.

Comex gold gained 2.19 per cent in May to settle at $2,347.7 an ounce. Comex silver posted a much better show in May with the white metal scaling a fresh 11-year high last month. Comex silver gained 15% to end the month at $30.55 an ounce. Mirroring the trend in the global markets, MCX gold closed 1.89% higher in May and closed at ₹71,850 per 10-gram. MCX silver closed 13.2% higher at ₹91,650 per kilogram.

‘Trend absent’

As anticipated last month, the price movement in Comex gold was devoid of any trend. The price was confined to the $2,280-$2,450 range in May. This price action is likely to persist until the price breaks out of the extremes of the range. A move above $2,450 would signal the start of the next leg up in Comex gold.

Until the breakout happens, expect volatile price action to continue, within this broad range.

From a medium-term perspective, Comex gold could head to $2,500-2,515 zone. This view would be invalidated on a fall below $2,150.

On a strong wicket

Comex silver ruled extremely strong in May, and the price also managed to move well past the target zone of $27.8-$28.5 mentioned last month. The recent rally has pushed the silver price to an overbought zone.

A cool off can therefore be expected in the short term to the $29.5-$30 range. The overall trend is still positive and Comex silver would resume its uptrend once the anticipated cool off is over.

Likely to ease

Mirroring the global trend, MCX gold too ruled firm and reached the target zone of ₹72,200-72,500 mentioned last month. MCX gold could rule soft in the near term and could ease to the immediate support at ₹70,500-71,000. Long term uptrend would resume once the expected cool off is completed. MCX silver remained buoyant in May and the price also went past the then-mentioned target zone of ₹83,200-83,500.

Expect silver price to remain range bound and ease a wee bit in the near future. A fall to ₹89,500-₹90,500 appears likely. The long-term uptrend is likely to resume on the completion of the expected pull-back. To summarise, the long-term outlook for both gold and silver remains positive. The price could however consolidate or edge lower in the near term.

(The author is a Chennai-based analyst / trader. The views and opinion featured in this column is based on the analysis of short-term price movement in gold and silver futures at COMEX & Multi Commodity Exchange of India. This is not meant to be a trading or investment advice.)