Last week, in terms of dollars, gold ($2,861/ounce) and silver ($31.8/ounce) were up 2.2 per cent and 1.7 per cent respectively. The Brent crude oil futures on the Intercontinental Exchange (ICE) ($74.70/barrel) depreciated 2.7 per cent.
In the domestic market, gold futures (₹84,888/10 gm) was up 3.1 per cent whereas silver futures (₹95,333/kg) gained 2.3 per cent. The crude oil futures (₹6,237/barrel) lost 1.8 per cent.
Below is an analysis of futures contracts in the domestic market.
MCX-Gold (₹84,888)
Gold futures (April), on the back of the prevailing upward momentum, rallied and hit a record high of ₹85,279 on Friday before moderating to ₹84,888.
The uptrend looks strong and there are no signs of a loss in traction. Nevertheless, there might be a minor corrective decline if traders decide to book some of their profits.
In case there is a drop in price, gold futures might touch ₹83,800, a potential support. Below this, ₹82,000 will be another support.
So, going ahead, gold futures can continue to rally from the current level or will resume the uptrend after softening to either ₹83,800 or ₹82,000. In the near term, the contract can reach ₹90,000.
Spot gold ($2,861): The price action shows strong momentum as it has been posting gains week after week. As it stands, there is a good chance for it to move towards the $2,980-3,000 range.
Trade strategy: Go long on MCX gold futures at ₹84,800 and accumulate at ₹83,800. Place stop-loss at ₹81,800. When the contract touches ₹87,000, revise the stop-loss to ₹85,800. Tighten the stop-loss further to ₹88,000 when the price hits ₹89,000. Exit at ₹90,000.
MCX-Silver (₹95,333)
Silver futures (March) broke out of the ₹90,000-93,600 range early last week, it then marked an intraweek high of ₹96,632 before softening to the current level of ₹95,333.
The contract now faces a resistance at ₹96,500. A breakout of this will open the door for another leg of rally. This upswing can lift silver futures to ₹1,02,500, a resistance.
That said, on the back of the barrier at ₹96,500, there might be a small price correction to ₹93,600. Only a fall below ₹91,500 can cancel out the prevailing bullish momentum.
Broadly, silver futures can continue to move up, though at a potentially slower pace when compared to gold futures.
Spot silver ($31.8): There is a barrier at $32.50. Going ahead, silver might see a dip, possibly to $31, and then start moving up towards $35.
Trade strategy: Consider buying silver futures at ₹95,300 and on a dip to ₹93,600. Keep initial stop-loss at ₹91,300. When the contract rises to ₹98,500, alter the stop-loss to ₹96,000. On a rally to ₹1,00,000, trail the stop-loss to ₹98,500. Exit at ₹1,02,000.
MCX-Crude oil (₹6,237)
Although the February crude oil futures lost 1.8 per cent last week, the chart shows that the selling momentum may be slowing down. Also, the price is above the 50-day moving average, which is currently at ₹6,200.
However, the contract lacks strength at this juncture to establish a rally. So, for the coming week, the crude oil futures might remain in a sideways band with its boundaries at ₹6,200 and ₹6,500. A breach of the ₹6,200-6,500 price band can lend us clues about the next leg of trend.
Resistance above ₹6,500 is at ₹6,850 whereas the immediate support below ₹6,200 is at ₹6,000. Subsequent support is at ₹5,750.
Brent futures ($74.70): The contract posted a loss for a third week in a row. Although the price is now below $75, it only closed marginally below the support and so, it cannot be taken as a clear breach. That said, there are no signs of a rally either. This leaves the likelihood of a sideways movement high. Nearest notable support and resistance are $72 and $77 respectively.
Trade strategy: Retain the long positions that we suggested at ₹6,350 since the crude oil futures remains above a support. Maintain a stop-loss at ₹6,170. If the contract regains traction and touches ₹6,600, revise the stop-loss to ₹6,420. Book profits at ₹6,850.
