Precious metals appreciated last week. In terms of dollars, gold was up 2.4 per cent as it closed at $2,720 per ounce. Silver rose 7 per cent and ended the week at $33.7 an ounce.
In the domestic market, gold futures (₹77,749 per 10 gm) was up 1.9 per cent and silver futures (₹95,402 per kg) appreciated 4 per cent.
MCX-Gold (₹77,749)
Gold futures (December) saw a fresh breakout and hit a record high of ₹77,839 on Friday before closing at ₹77,749. The breakout has led to the contract confirming a bull flag pattern, according to which the price can rise to ₹80,000.
On the other hand, if gold futures decline from the current level, it can find support at ₹76,500. If ₹76,500 is invalidated, the contract can extend the decline to ₹75,000. As long as this level holds true, the inclination will be bullish.
Trade strategy: We had recommended longs at ₹74,820. Since the contract has surpassed ₹77,000, the revised stop-loss would be at ₹75,800.
The initial target we suggested was at ₹78,000. Since the price action shows a strong positive momentum and that there is a bullish pattern supporting a rally to ₹80,000, we suggest revising the target upwards from ₹78,000 to ₹80,000.
MCX-Silver (₹95,402)
Silver futures, which witnessed a slow start last week, gradually picked up momentum and rallied sharply, especially on Friday.
It made a low of ₹89,705 early in the week but then surged to mark a high of ₹95,521 before ending the week at ₹95,402.
The chart shows that the silver futures has seen a fresh breakout and is likely to extend the rally to ₹1,00,000. If there is a decline from the current level, it can find support between ₹88,200 and ₹90,000.
Trade strategy: Hold the long positions that we suggested at ₹90,845. The revised stop-loss would be at ₹92,000. Since there are solid indications for the upswing to extend, change the target from ₹96,200 to ₹98,500.