The precious metals declined last week. In terms of dollars, gold and silver were down 1.5 per cent and 2.8 per cent to close at $1,913.3 and $22.7 respectively.

Similarly, on the Multi Commodity Exchange (MCX), gold futures was down 1 per cent, as it closed the week at ₹58,906 per 10 gram. Silver futures fell 3.5 per cent to end at ₹69,976 per kg.

MCX-Gold (₹58,906)

Gold futures (October series) broke below the lower band of the ₹59,300-60,320 range. This has turned the outlook negative. However, the driver of the price of gold futures — gold in the international market is near a support. Therefore, we cannot consider the trend in MCX gold futures as outright bearish.

The nearest support is at ₹58,000. A breach of this can drag the contract to ₹56,000. On the other hand, the immediate resistance level can be ₹59,300. Subsequent hurdle is at ₹60,320.

Trade strategy: While MCX gold futures has turned bearish, the downside can be limited as the gold in dollar terms has a considerable support. Therefore, we suggest staying on the sidelines for now.

MCX-Silver (₹69,976)

Silver futures (September contract) declined for the fourth consecutive week, showing strong bearish momentum. It also dropped below the 200-day moving average.

However, there is a support at ₹68,500 and ₹69,000. So, from the current level, the contract might fall to this support band and then witness a corrective rally. Such an up move can lift the contract to the ₹72,500-73,000 price band.

But eventually, the contract is likely to resume the downtrend and can decline to ₹67,000. A breach of this can lead to a fall to ₹63,000.

Trade strategy: Although the bears are likely to be in control, the risk-reward ratio is not favourable for fresh short positions at the moment. So, we recommend waiting for now and going short on silver futures if there is a corrective rise.

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