Gold, silver prices to remain rangebound

After an up move in the early part of the month, the prices of precious metals remained largely rangebound during the rest of October. The flow of weak economic data from the U.S. played a key role in bolstering sentiment towards precious metals in the first week of October.

Precious metal prices recovered towards the end of October as the dollar came under pressure after the U.S. Federal Reserve cut interest rates. The uncertainty surrounding the U.S.-China trade deal also helped the cause.

At the end of October 2019, Comex gold closed 2.8% higher at $1,514.8 an ounce while Comex silver was up 6.3% to settle at $18.1 an ounce.

In the domestic market, the price of gold futures at MCX appreciated by 4.5% in October to close at ₹38,578 per 10-grams. MCX silver futures, too, was strong and closed 6% higher at ₹46,764 per kilogram.

The short-term outlook for Comex gold and silver is positive. Comex gold is likely to head towards its immediate resistance level of $1,535-1,550/ounce zone.

However, there is a risk of gold price falling to lower levels if the recent high of $1,562/ounce is not taken out. Until the price moves past $1,562/ounce, there is a likelihood of a ‘rangebound’ to ‘negative’ trend in gold. A fall below $1,450/ounce would indicate the gold price could seek lower levels.

For now, $1,562 and $1,450/ounce are the key levels to focus on for Comex gold. A breakout past either of these levels would set the tone for the next big move in gold.

The short-term outlook for silver is also positive. Comex silver could rally to the short-term target of the $18.7-19/ounce range. However, a fall below the support at $16.5/ounce would indicate that the short-term trend is negative in silver and could push the price lower to $15-15.5/ounce. A move past the positive trigger level of a high of $19.6/ounce would indicate that silver has resumed the recent medium-term uptrend.

Similar to Comex gold, the trend in silver prices, too, would hinge on the breakout past key levels of $16.5/ounce on the lower side and $19.6 on the higher side. Expect the price to remain rangebound until either of these levels is broken.

The outlook for MCX gold and silver appears positive. The gold futures price at MCX is likely to rise to the target of ₹39,800-40,500 per 10 grams.

The positive view would warrant a reassessment if the price falls below the support zone at ₹38,000-38,100 per 10 grams. Below ₹38,000, MCX gold could ease to the ₹34,500-34,750 zone.

MCX silver could move higher to the immediate target of the ₹48,400-48,800 zone. There is a strong support for silver at the ₹45,100-45,200 zone. A close below ₹45,000 would invalidate the positive outlook and could push MCX silver price to lower levels of ₹39,000-39,500 per kilogram.

To summarise, precious metals are likely to remain rangebound. A breakout past key trigger levels mentioned above would set the tone for the next big move. Until then, expect a volatile and rangebound trend to persist.

(The author is a Chennai-based analyst/trader. The views and opinions featured in this column are based on the analysis of short-term price movement 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 | Mar 2, 2021 11:05:46 AM |

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