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After a couple a bout of weakness for two months, precious metals regained their sheen, with comex gold and silver posting their biggest monthly gain since March. The weakness in the U.S. dollar along with expectations of a pause in the interest rate hike by the U.S. Federal Reserve played a key role in bolstering sentiment towards precious metals.
Comex gold edged past the psychological $2,000-mark to close at $2,003.7 at the end of July. This represents a gain of 3.9% for the month of July.
Comex silver posted a much better performance in July, registering a 8.3% gain to end the month at $24.89 per ounce.
Mirroring the trend in the global markets, MCX gold closed on a positive note at ₹60,082, representing a gain of 2.75% in July. MCX silver closed 7.7% higher to end July at ₹75,427 per kilogram.
The price of Comex gold has been confined to a range in the past few weeks. A move out of this range of $1,910-2,010 would set the tone for the next directional move in gold. A breakout above $2,010 would have positive implications and Comex gold could then head to the next target of $2,055-2,070. On the other hand, a fall below $1,910 would be a sign of weakness and could push the price lower to the next support at $1,845-1,850.
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A range bound price action is evident in Comex silver too. The white metal has been trading recently in the $22.5-25.5 range. A breakout from this range would influence the next major move in silver. Above $25.7 the price could head to the next target of $26.8-27.5 while a fall below $22.3 could trigger a slide to $21-21.2.
In the domestic market, MCX gold, too, has witnessed a range-bound price movement. A move above the upper end of the range at ₹60,900 or a fall below the lower end of the range at ₹57,500 would set the tone for the next big move in MCX gold. Above ₹61,000, the price could head to the next higher target of ₹62,500-63,000 while a fall below ₹57,500 could push the price lower to ₹55,500-56,000.
Similar to the price action in global markets, MCX silver too is confined to a range of ₹68,400-76,800. A breakout from this range will determine the next big move in silver. Above ₹76,800 the price could head to ₹79,500-80,500, while a fall below ₹68,400 could push the price to ₹63,500-64,500.
To summarise, the precious metals price is stuck in a broad range and a breach of the upper or lower end of this range would influence the next big move in prices. Until then rangebound and volatile price action is likely to prevail.
(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)
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