The fall in US inflation triggered a sell-off in the dollar leading to a rally in precious metals. While gold rallied nearly 1.6 per cent, silver surged 7.8 per cent to end at $1,955 and $24.9 per ounce respectively.

Similarly, on the Multi Commodity Exchange (MCX), gold futures was up nearly 1 per cent as it ended the week at ₹59,316 per 10 gram. Silver futures gained 6.5 per cent to close at ₹75,968 per kg on Friday.

MCX-Gold (₹59,316)

Gold futures (August series) looks up but faces resistance between ₹59,400 and ₹59,600. However, considering the price action of gold in terms of dollars, which is the main driver of MCX gold futures, there is a good chance for a rise.

A breach of ₹59,600 can lead to a rally to ₹62,000. The nearest supports are at ₹58,600 and ₹57,750.

Trade strategy: The trend is turning bullish. However, there is a resistance nearby and the stop-loss for the short position (initiated at ₹58,600) is at ₹59,600. The stop-loss is not far from the current level. So, retain the short position.

When the contract slips below ₹58,600, tighten the stop-loss to ₹59,200. On a fall to ₹56,800, exit half of the short positions and tighten the stop-loss to ₹57,600. Liquidate the balance half at ₹55,800.

But in case the stop-loss of shorts at ₹59,600 is hit, and the contract decisively breaches ₹59,600, go long on gold futures with stop-loss at ₹58,600.

When the contract rallies past ₹60,500, modify the stop-loss to ₹59,800. Further tighten the stop-loss to ₹61,000 when the price touches ₹61,500. Exit the longs at ₹61,800.

MCX-Silver (₹75,968)

Silver futures (September contract) rallied sharply and closed above ₹75,000 – a bullish sign. But ₹76,000 is a resistance against which it might see some moderation in prices.

In such a case, the contract could retest ₹73,700, a support. Subsequent support is at ₹72,500. On the other hand, notable resistances can be spotted at ₹77,500 and ₹79,000.

Trade strategy: The stop-loss of shorts at ₹73,000 was hit last week. Risk-reward is unfavourable for both long and short positions at this juncture. So, stay out for now.

Related Topics