Gold ($2,507 per ounce) and silver ($29 per ounce), in dollar terms, surged 3.1 per cent and 5.8 per cent respectively last week. In the domestic market, MCX gold futures (₹71,375 per 10 gram) posted a gain of 2.1 per cent, whereas MCX silver futures (₹83,213 per kg) was up 3.3 per cent.
MCX-Gold (₹71,375)
Gold futures (October) rallied and closed marginally above the key level of ₹71,300. While this may not be considered as a decisive breakout, given that the bulls are gaining momentum, the likelihood of a rally from here is high.
We expect the contract to touch ₹73,500 and ₹75,000 over the next month. A breakout of ₹75,000 can result in gold futures establishing a fresh leg of rally, which can take it to ₹80,000.
In case the price falls from the current level, the contract can find support at ₹70,000.
Trade strategy: Buy gold futures now with a stop-loss at ₹69,500. When the contract touches ₹74,000, revise the stop-loss to ₹72,500. Book profits at ₹75,000.
MCX-Silver (₹83,213)
Silver futures (September) has surged past the 20-day moving average and a trendline hurdle. So, although the contract is yet to see a breakout of the resistance at ₹84,800, it is well positioned to make an up move.
The contract is anticipated to surpass ₹84,800 and rally to ₹89,000 in the short term. It could meet a trendline resistance at ₹89,000. But a breakout of this can lift silver futures to ₹94,000.
In case the contract falls from the current level, the support at ₹80,000 can arrest the decline beyond this level.
Trade strategy: Buy silver futures at the current level of around ₹83,200. Place stop-loss at ₹79,800. When the contract rises to ₹86,000, revise the stop-loss to ₹84,000. Liquidate the longs at ₹89,000.