Precious metals posted loss last week. Gold and silver lost 1.5 per cent and 3.9 per cent, as they ended at $2,293 and $29.2 per ounce, respectively.
Similarly, in the domestic market, gold futures lost 0.7 per cent to close at ₹71,353 (per 10 gram), whereas silver futures was down 2.7 per cent as it ended at ₹89,089 (per kg).
MCX-Gold (₹71,353)
Gold futures (August contract), which was bullish for most part of the week, saw a sharp decline in price on Friday, leading to a weekly loss.
The price action on the daily chart is now showing weakness. There might be a correction ahead. That said, there is a support at ₹71,000, a break of which can drag the contract to ₹69,000 quickly.
But if gold futures recover, it will face resistance at ₹73,500 and ₹75,000. Only a breach of the latter can give some momentum to the bulls.
Trade strategy: Stay out now and go short on gold futures if the price falls below ₹71,000. Target and stop-loss can be at ₹69,000 and ₹72,000 respectively.
MCX-Silver (₹89,089)
Silver futures (July series), too, saw a swift price drop on Friday resulting in it posting a weekly loss of 2.7 per cent.
The chart indicates that the contract is about to experience a corrective decline in the coming sessions. While ₹86,000 is the nearest support, we expect the contract to slip below this and touch ₹83,000.
On the other hand, if there is a rally, silver futures will face barriers at ₹93,500 and ₹95,000. For the trend to turn bullish, the contract ought to break out of ₹95,000.
Trade strategy: Go short on silver futures if it declines below ₹89,000. Place stop-loss at ₹91,700. When the contract falls to ₹86,000, tighten the stop-loss to ₹88,500. Liquidate the shorts at ₹83,500.