Gold ($4,676/ounce) and silver ($73/ounce) appreciated 4 per cent and 4.7 per cent respectively last week. In the domestic market, gold futures (₹1,49,680 per 10 gm) rose 1.6 per cent whereas silver futures (₹2,32,495 per kg) was up 2 per cent.
MCX-Gold (₹1,49,680)
Gold futures (June) gained in three out of four sessions last week, hinting that the bulls may be gaining traction. However, the contract could not surpass a resistance at ₹1,55,000. Also, the price continues to remain below the 21-day moving average.
We expect gold futures to see a leg of downtrend from the current level. Once the decline begins, gold futures can drop to ₹1,32,000 in the near-term.
On the other hand, if gold futures recovers and surpasses the resistance at ₹1,55,000, the near-term outlook can turn positive, where the contract can rally to ₹1,62,000.
However, as the resistance stays true at the moment, the likelihood of a decline is high.
Trade strategy: Sell gold futures (June) at ₹1,50,000. Target and stop-loss can be ₹1,32,000 and ₹1,57,000 respectively.
MCX-Silver (₹2,32,495)
Silver futures (May), too, rose until Wednesday and saw a decline only on Thursday. Consequently, it posted a gain on a weekly basis.
However, the contract failed to cross over the resistance at ₹2,50,000. This shows that while the bulls attempted to take control, the bears have defended it, for now.
The price action shows a negative bias and we anticipate a decline from the current level, possibly to ₹2,00,000. But in case silver futures breaks out of ₹2,50,000, it can extend the upswing to ₹2,80,000.
That said, so long as the hurdle at ₹2,50,000 holds, the bears will have an advantage.
Trade strategy: Sell silver futures (May) at ₹2,39,000. Target and stop-loss can be ₹2,00,000 and ₹2,55,000.