Silver rallied sharply and hit multi-year high last week. It appreciated 11.7 per cent for the week as it ended at $31.5 per ounce. Gold continued its upward trajectory as well and posted a weekly gain of 2.3 per cent as it ended at $2,414.7 per ounce on Friday.
Similarly, on the Multi Commodity Exchange, gold futures gained 1.4 per cent to end at ₹73,711 (per 10 gram), whereas silver futures was up 7.2 per cent to close at ₹91,024 (per kg).
MCX-Gold (₹73,711)
Gold futures (June contract), after opening on a weak foot, recovered quickly and resumed the rally. The chart shows potential for further rally.
The nearest potential resistance is at ₹75,000 and the subsequent one is at ₹78,000. But given the current upward momentum, gold futures could even surpass ₹78,000 and touch ₹80,000.
But in case there is a change in the direction of the trend, gold futures can find support at ₹71,800 and ₹70,000. A break below ₹70,000 can turn the outlook bearish, which is highly unlikely.
Trading strategy: We suggested long positions at ₹71,800. As the contract has moved above ₹73,500, the revised stop-loss would be at ₹72,000. Retain this trade and book profits at ₹75,000.
MCX-Silver (₹91,024)
Silver futures (July series) thrashed all barriers and hit record highs as bulls ran berserk. With the current strength, the contract looks set to hit ₹1,00,000-mark soon.
After touching ₹1,00,000, there might be a corrective decline as traders might book some profits at the psychological level. If the rally extends beyond ₹1,00,000, the contract can move up to ₹1,05,000 or even to ₹1,10,000.
But if there is a decline from the current level, it can be restricted to ₹89,000, a potential support. Subsequent support is at ₹87,500.
Trading strategy: For a better risk-reward ratio, traders can wait and go long if the price dips to ₹89,000. Stop-loss for this trade can be at ₹87,000. When the contract rises to ₹95,000, tighten the stop-loss to ₹92,000. Exit at ₹1,00,000.