Firm equities keep metals in check


November saw gold, silver prices in narrow range as estimated

The price of precious metals was confined to a narrow range in November 2019. The lacklustre price action was evident in the domestic as well as international markets. The firm trend in equity markets and the strength in the U.S. dollar played a key role in keeping precious metal prices in check last month.

The international gold price dropped to a three-month low in the second week of November before recovering to slightly higher levels thereafter. At the end of November 2019, Comex gold closed 2.9% lower at $1,470.4. an ounce while Comex silver fell 6.07% to settle at $16.97 an ounce.

In the domestic market, the price of gold futures at MCX dropped 2.2% in November to close at ₹37,723 per 10 gm. MCX silver futures too ruled weak and slipped 5.6% lower at ₹44,159 per kg.

The short-term outlook for Comex gold and silver does not appear too positive.

The recent range-bound price action is likely to persist in Comex gold until the price moves either above $1,480 an ounce or falls below the $1,440 level. A break past either of these levels would set the tone for the next significant move in gold. Above $1,480, gold price could rise to the next resistance of $1,510-1,520. However, a slide below $1,480 would suggest the scope for a drop to the $1,400-1,420 level.

The short-term outlook for silver similar to that for gold. The immediate resistance for silver is at $17.3 while the support level is at $16.5-16.6.

A move past either of these levels would determine the direction of the next move in Comex silver. Above $17.3, a rise to $18-18.3 is likely.

However, a fall below the support at $16.5 would indicate that the short-term trend is negative, and the price could drop to $15-15.5.

The short-term outlook for MCX gold and silver appears moderately positive.

The gold futures price at MCX is likely to rise to the short-term target of ₹39,200-39,500 per 10 gm. The positive view would warrant a reassessment if the price falls below the support zone at ₹37,000-37,300 per 10 gm. Below ₹37,000, MCX gold could ease to the ₹36,500-36,750 zone.

MCX silver could move higher to the immediate target of the ₹46,400-47,000 zone. There is a strong support for silver at the ₹43,500-44,000 zone.

A close below ₹43,500 would invalidate the positive outlook and could push the MCX silver price to lower levels of ₹42,000-42,500 per kg.

To summarise, precious metals are likely to remain largely range bound.

A move past key trigger levels mentioned above would influence the direction for the next big move. Until then, it would be reasonable to expect a range-bound trend to persist.

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

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Printable version | Dec 8, 2019 3:49:31 AM |

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