Even as the dollar rallied, precious metals bounced back after some moderation in price in the first half of this month.

In dollar terms, gold ($2,712/ounce) and silver ($31.3/ounce) rose 5.9 and 3.6 per cent respectively. Similarly, in the domestic market, gold futures (₹77,616/10 gm) was up 5 per cent and silver futures (₹90,768/kg) gained 2.7 per cent.

MCX-Gold (₹77,616)

Contrary to our expectations of some more decline before a recovery, gold futures (December) rebounded strongly last week. The 20-week moving average at ₹74,300 aided the resumption in uptrend.

There is a good chance for the bulls to carry the momentum this week, consequently lifting the price to ₹80,000. Potential resistance above ₹80,000 is at ₹85,000.

In case there is a fall from the current market price, it is likely to be arrested at either ₹76,000 or ₹75,000.

Trade strategy: Buy gold futures now at ₹77,616 and on a decline to ₹76,000. Place stop-loss at ₹74,900. When the contract touches ₹80,000, revise the stop-loss to ₹77,000. On a rally to ₹82,000, raise the stop-loss to ₹80,000. Book profits at ₹84,000.

MCX-Silver (₹90,768)

Silver bulls were less aggressive compared to gold. The December contract was largely flat through the last week except for a gain on Monday. Yet, it ended in the green.

Conditions are conducive for silver futures to rally – the contract is above a key support and gold has been positive. So, an upswing to ₹96,600 is very likely.

But if the contract breaches the support at ₹88,000, it can open the door for a fall to ₹83,000, a support. Subsequent support is at ₹80,800.

Trade strategy: Buy silver futures now at ₹90,768. Add longs if the price dips to ₹88,500 and place stop-loss at ₹87,000. When the contract hits ₹93,000, modify the stop-loss to ₹90,000. Exit at ₹96,600.

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