Gold, silver lack lustre – The Hindu BusinessLine

The price action in precious metals was listless in May with Comex gold and silver closing the month with a marginal loss.

The strengthening of the US dollar played a key role in keeping the prices under pressure. There was, however, some recovery towards the close of the month, aided by a softening US dollar.

In May, Comex gold fell 0.85 per cent to settle at $1,982.1 per ounce. Comex silver saw a much steeper fall of 6.5 per cent to close at $23.6. Mirroring the trend in the global markets, MCX gold closed at ₹60,198, a marginal fall of 0.17 per cent. MCX silver closed 4.4 per cent lower to the end of May at ₹72,102 per kilogram.

As anticipated last month, the price of Comex gold slid to the target price of $1,940-1,950. After dropping to a low of $1,936 on May 26, the price has been recovering. The recent recovery suggests the next leg of the uptrend is underway in Comex gold.

The price could head to the immediate target zone of $2,025-$2,030. The short-term positive outlook would be invalidated if the price falls below the support zone of $1,920-$1,925. A breakout above $2,035 could push the Comex gold price to the next target zone of $2,050-2,060.

Comex silver, too, hit the target zone of $23.5-$24 mentioned last month. After dropping to a low of $22.78 on May 26, the price recovered. The short-term outlook is positive and silver price could rise to the target zone of $25.5-$26.

A move past $24.5 would strengthen the case for a rally to the target zone. A fall below $22.6 would be a sign of weakness and invalidate the positive outlook.

In the domestic market, MCX gold remained subdued. The price, however, did not drop to the then-mentioned target zone of ₹57,600-58,000. The short-term outlook is positive and the price could head to the target zone of ₹61,500-62,000. This outlook will be invalidated if the price falls below ₹59,000.

As anticipated, MCX silver ruled weak in May and the price also hit the target zone of ₹72,500-73,000. The short-term outlook is positive, and the price could head to the target zone of ₹75,500-76,000. A move above ₹73,500 would strengthen the case for a rally to the target zone while a fall below ₹70,000 would invalidate the positive view.

To summarize, the recent price action indicates precious metals could head higher in the short term. The positive outlook would be valid as long as the price sustains above the negative trigger level mentioned above.

(The author is a Chennai-based analyst/trader. This is not meant to be trading or investment advice.)

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