Get set for volatility

Gold, silver prices move in a weak band

After an initial spike in the first week of March, precious metals fell sharply along with other asset classes in the second week. Comex gold gained 1.91% in March to settle at $1,596.6 an ounce while Comex silver fell by a whopping 13.6% to close at $14.15 an ounce.

In the domestic market, gold futures on the MCX gained 3.3% in March to settle at ₹42,956 per 10 gm. MCX silver futures slipped 10.1% in to close at ₹39,523 per kg.

As observed in the previous post, Comex gold turned weak and fell way below the target zone of $1,510-1,520. The short-term outlook for Comex gold remains weak and a slide to $1,450-1,490 appears likely.

From a medium-term perspective, gold price is likely to trade in the range of $1,450-1,700. Until there is a breakout from this range, a range-bound action is likely to persist.

Comex silver, too, ruled weak and hit the earlier mentioned target zone of $15.5-15.7 an ounce. The short-term outlook remains weak and a drop to $13-13.5 appears likely. The trend would remain weak until the price moves past the resistance at $16.6-17 zone.

Outlook positive for MCX gold

The short-term outlook for MCX gold futures is positive and a breakout past ₹43,800 would push the MCX gold price to the short-term target of ₹44,800-45,000. The trend would turn weak if the price falls below ₹41,500 per 10 gm.

The short-term outlook for MCX silver is positive and the price could move up to ₹42,800-43,500 range. A move past ₹41,750 would strengthen the positive view. A drop below ₹33,000 would indicate a major trend reversal and the price could then slide to far lower levels.

To summarise, precious metals achieved their short-term downside targets and have rebounded thereafter. Though there is a case for a minor bounce, especially in the domestic market, the international price of gold and silver are likely to remain volatile and range-bound.

(The author is a Chennai-based analyst/trader. The views and opinion featured in this column are based upon the analysis of short-term price movements in gold and silver futures at COMEX and the Multi Commodity Exchange of India. This is not meant to be trading or investment advice)

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Printable version | May 29, 2020 4:16:48 AM |

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