Gold and Silver Face Selling Pressure

Gold and silver broadly remained under selling pressure last week. In terms of dollars, gold and silver lost 1.7 per cent and 0.4 per cent to end the week at $1,976.6 and $23.8 per ounce, respectively.

On the Multi Commodity Exchange (MCX), the gold futures contract was down 0.8 per cent, in line with global trend, and ended at ₹60,379 (per 10 gram). However, the silver futures produced a marginal gain of 0.4 per cent to close at ₹73,321 (per kg).

MCX-Gold (₹60,379)

The June gold futures, despite facing selling pressure, managed to close above the support band of ₹59,000-59,600. In case there is a recovery from here, it might face a barrier at ₹61,800. A breach of this can lift the contract to ₹63,000.

But if the contract falls below ₹59,000, it can see a quick drop to ₹57,500 – a support. Subsequent support is at ₹55,500.

Trade strategy: The pending buy order at ₹59,600 would have been triggered last week. Before that, we recommended longs at ₹60,511. Thus, the average buy price is now at ₹60,056. Retain this trade. However, revise the target lower from ₹62,800 to ₹61,500. Stop-loss can be the same at ₹58,800.

Yet, traders, who wish to avoid risk, exit the longs.

MCX-Silver (₹73,321)

Silver futures closed the week with a gain because of the rally on Friday. Thus, the support at ₹72,000 is holding well for the contract. Although there is some bearishness exhibited by silver futures, until the support at ₹72,000 holds true, further decline is less likely.

That said, a strong support does not guarantee a rally as there is a strong barrier at ₹75,000. So, as it stands, there is a good chance that the contract will start consolidating between ₹72,000 and ₹75,000.

Immediate support below ₹72,000 is at ₹70,000. Subsequent support is at ₹67,000. Resistance above ₹75,000 is at ₹78,500 and ₹80,000.

Trade strategy: We suggest staying out now and wait for the breach of the ₹72,000-75,000 range. But traders with higher risk-appetite can go short if the silver futures move up to ₹74,500. Target and stop-loss can be at ₹72,000 and ₹76,100.

Related articles