The precious metals were appreciated for a third week in a row, showing strong momentum. Gold and silver appreciated 3.4 per cent and 4.5 per cent as they closed the week at $2,070.9 and $25.4 per ounce respectively.
Likewise, on the MCX, gold futures was up 2.8 per cent and silver futures gained 3.4 per cent by closing the week at ₹63,357 (per 10 gram) and ₹78,087 (per kg) respectively.
MCX-Gold (₹63,357)
Gold futures (February contract) rallied past the resistance at ₹61,800 and ₹63,300 last week. The price action shows strong upward momentum, and the probability of further rally is high.
The nearest barrier can be identified at ₹65,000. If the upswing extends beyond this level, gold futures could touch ₹66,000 in the near term.
If there is a correction from the current level, it is not likely to go beyond ₹62,500, a potential support. Below this level, ₹61,800 is now a resistance-turned-support.
Trading strategy: Since gold futures has broken out of the resistance at ₹63,300, traders can initiate fresh long positions. That is, buy now at ₹63,357 and accumulate if the price dips to ₹62,500. Place initial stop-loss at ₹61,700.
When the contract rallies past ₹64,000, tighten the stop-loss to ₹62,800. Tighten the stop-loss further to ₹63,800 when the price touches ₹64,500. Exit at ₹65,000.
MCX-Silver (₹78,087)
Silver futures (March series) rallied to mark an intraweek high of ₹78,240 on Friday before closing a little lower at ₹78,087.
In case silver futures continues its uptrend, it is likely to face minor resistance at ₹79,400. But eventually, the contract might rise to ₹81,000, a potential resistance. Above this, ₹83,000 can be a barrier.
But if silver futures falls from the current level, the nearest supports are at ₹76,800 and ₹75,000.
Trading strategy: Buy silver futures now at ₹78,087 and on a dip to ₹76,400. Stop loss at ₹75,000. When the contract rallies above ₹79,400, tighten the stop-loss to ₹77,000. Book profits at ₹81,000.