Precious metals remained weak in September with Comex gold closing near their two-and-a-half year low of $1,672 an ounce. The strengthening U.S. Dollar along with the interest rate hikes undertaken by several central banks across the globe dented the sentiment towards precious metals. There was, however, some relief towards the close of the month when U.S. dollar softened a bit, helping the precious metals to bounce off the lows.
Comex gold fell 3.1% in September to close at $1,672 an ounce. Comex silver, however, managed to close in the green, recording a gain of 6.5% to close at $19.04 an ounce. In the domestic market, the damage to the precious metals was mitigated by the weakness in the Indian Rupee versus the U.S. Dollar. MCX gold futures fell 1.1% to close at ₹50,194 per 10-gm. MCX silver futures closed 6.9% higher to settle at ₹56,858 per kgr, at the end of September.
In line with expectations, Comex gold price ruled weak and dropped well below the then mentioned target zone of $1,660-1,670. The recent fall has pushed the price to an oversold scenario, and this could trigger a mean reversion or a short-term bounce.
Comex gold could rise to the immediate target of $1,695-1,715 range. A move past $1,680 would strengthen this short-term positive outlook. While the short-term outlook is positive, the medium- and long-term trend remains weak. A close below $1,645 will be a sign of weakness and would invalidate the positive outlook.
Comex silver price managed to rule firm last month. Comex silver is likely to head higher in the short-term. A move past $19.2 would confirm the positive outlook and could push silver price to the target of $20.6-21. A fall below $17.9 would invalidate this positive outlook.
In the domestic market, MCX gold price continues to be in a consolidation. The short-term outlook is positive and MCX gold could rise to the immediate target of ₹51,500-52,000. Above ₹52,000, the price could head to ₹52,800-53,500 range. This view would be invalidated if the price falls below ₹49,000.
Similar to the international market, MCX silver, too, managed to outperform gold in September. The short-term outlook is positive, and the price could rally higher to the target range of ₹58,500-59,500. This positive outlook would be under threat if the price drops below ₹55,000.
To summarise, the short-term outlook for precious metals is positive in the short-term. The medium term outlook however remains weak and the downtrend is likely to resume on the completion of the anticipated short-term rise.
(The author is a Chennai based Analyst / trader. This is not meant to be a trading or investment advice)