After being confined to a narrow range in the prior months, the price of Comex gold staged a breakout in July and managed to scale new all-time highs recently. Comex silver, however, remains subdued and did not share the enthusiasm displayed by the yellow metal.
The expectations of an interest rate cut by the U.S. Federal Reserve and the fresh escalation in geopolitical tension in West Asia acted as a trigger to bolster gold’s price.
Comex gold gained 6.7% in July to settle at $2,493.4 an ounce. Comex silver, however, was subdued and closed lower by 0.93% to end the month at $29.16 an ounce.
Customs duty cut
The positivity witnessed in the global markets did not, however, resonate in the domestic markets. The domestic prices took a knock owing to the sharp reduction in basic customs duty on gold and silver announced in the recently-presented Union Budget.
As a result, MCX gold fell 3.09% in July and closed at ₹69,670 per 10-grams. MCX silver witnessed a slightly deeper cut of 6.65% to end the month at ₹83,600 per kilogram.
The Comex gold price moved in sync with last month’s expectations and the price managed to reach the then-mentioned target zone of $2,500-2,515. The short-term outlook remains positive, and the price could head to the next target zone of $2,575-2,585. This view would be invalidated on a close below $2,340.
Comex silver price continued its recent range-bound price action in July. As observed last month, the overall trend is still positive for silver and a move above $31.2 would signal the start of the next leg of the up move. The positive outlook would be under threat if the price falls below $26.1. The sharp cut in customs duty on gold has altered the technical structure in the MCX gold chart. The short-term trend appears positive but with a modest target potential of ₹72,100-72,900. Only a move above ₹73,200 would impart momentum to the upside. Until then expect a range bound price movement with modest upside potential in MCX gold.
Similar to gold, the MCX silver price structure too was affected by the sharp drop in the price triggered by the customs duty reduction positivity. Until the price moves above ₹95,000, expect a range bound price movement with a downward bias.
To summarise, the short-term outlook for gold appears positive while silver could continue its recent range-bound price movement. Keep an eye on the upside trigger levels for further cues.
(The author is a Chennai based analyst / trader. This is not meant to be a trading or investment advice.)