Comments
Gold was flat in the international spot market last week whereas silver outperformed the yellow metal by gaining 1.2 per cent. The yellow metal closed the week at $1,796.2 per ounce and silver ended at $23.43 an ounce.
That said, while silver was better than gold in the domestic market too, both precious metals were up for the week because of the rupee depreciation. The Indian currency declined 1.2 per cent against the dollar over the past week.
The gold futures (February expiry) on the Multi Commodity Exchange (MCX) appreciated 0.8 per cent to close the week at ₹54,295 (per 10 gram). The silver futures (March series) on the MCX was up 2.4 per cent last week as it ended at ₹68,038 (per kg).
As the price has been on a rise since early November, the investor confidence in gold seems to be improving. The latest data by the World Gold Council (WGC) shows that the net outflows from the global gold ETFs (Exchange Traded Funds) slowed in November to 34 tonnes compared to 59 tonnes in October and 96 tonnes in September. If gold can rally further, we might probably start seeing inflows which will further boost the prices.
MCX-Gold (₹54,295)
Even though there was a minor blip on Monday, the December gold futures regained traction and moved up for the rest of the week.
The uptrend appears steady as long build-ups continue to happen since early November. As the price rallied, the cumulative Open Interest (OI) of gold futures on the MCX has now increased to 17,642 contracts. In comparison, it was at 14,477 for the week ended October 28.
Therefore, currently trading at around ₹54,295, the contract has the potential to travel up and touch ₹55,000 — a resistance level — in the short run. Subsequent resistance is at ₹56,000.
On the downside, the contract has support at ₹53,600 and ₹53,300 — its 20-day moving average (DMA). Below that lies a support at ₹52,600 — a significant base.
Trade strategy: We have been suggesting longs since the past one month. As per our recommendation, traders would now be holding a long position at ₹52,100. The revised stop-loss would now be at ₹52,600. Currently at ₹54,295, one can continue to hold this position for a target of ₹55,000. But tighten the stop-loss to ₹53,000 when the contract surpasses ₹54,500.
MCX-Silver (₹68,038)
The March silver futures, which saw a small dip on Monday like gold futures, steadied and recommenced the rally. The contract closed just above ₹68,000 and it is moving closer to the psychological level of ₹70,000. A breach of this level can take it to ₹73,000. The immediate support can be seen at ₹67,000 with the subsequent one at ₹65,000.
The long build-up continued last week as well. The cumulative OI of silver futures on the MCX increased to 21,805 contracts on Friday compared to 21,331 contracts a week ago. It stood at 19,299 contracts on November 4. Thus, the bulls have been in control for over a month now and we can expect them to lift the prices further up.
Trade strategy: Last week, we advised to buy March silver futures at ₹66,450. We had also asked to add more longs in case the price dipped to ₹64,600. However, this did not occur. So, traders would now be holding a long position taken at ₹66,450 with stop-loss at ₹62,300.
Going forward, hold the longs but tighten the stop-loss to ₹65,500. Book profits at ₹70,000 because we might see a fall off this level.
Comments
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.