Building on the positive trend in April, precious metals closed on a healthy note in May. The weakness in the U.S. dollar and inflation concerns helped Comex gold close near a 5-month high on May 28.
Comex gold gained 7.8% in May to close at $1,905.3 an ounce. Comex silver, too, closed on a positive note, clocking a gain of 8.3% to settle at $28.02 an ounce.
Mirroring the global trend, MCX gold futures gained 4.9% to close at ₹49,349 per 10-gm. MCX silver futures gained 5.2% to settle at ₹71,898 per kg.
Comex gold price moved well past the target of $1,865-1,880 mentioned last month.
The price could be confined to a trading range as the recent rally has pushed the price into a short-term, overbought region. A move past $1,925 would indicate that the move to $1,950-1,960 is underway.
Until this happens, expect range-bound or subdued action in the near term.
Silver hits target
Comex silver, too, achieved the target of $27.7-28.5 mentioned last month. Silver prices are also likely to be remain subdued and confined to a range in the near term.
A move past $29.1 would indicate that the white metal is headed to the next target of $30.2-31. Until the breakout happens, the price is likely to be subdued. MCX gold ruled firm in May and also moved to the then-mentioned target of ₹48,500-49,500. The short-term is positive and a rise to ₹51,500-52,000 appears likely. This view would be invalidated if the price closes below ₹47,200.
MCX silver reached the target at ₹71,500-72,000 indicated earlier. The short-term outlook is positive and MCX silver could head to the next target of ₹76,700-77,000. This view would be invalidated if the price falls below ₹69,100.
To summarise, the medium-term outlook for precious metals remains positive.
While there is a possibility of either a short-term consolidation or a minor cool-off, the medium-term uptrend is likely to reassert itself once the anticipated cool-off happens.
(The author is a Chennai-based analyst/trader. This is not meant to be trading or investment advice)
