Gold ($2,858/ounce) and silver ($31.2/ounce) depreciated 2.7 per cent and 3.9 per cent respectively last week.
In the domestic market, gold futures (₹84,219/10 gm) was down 2.1 per cent and silver futures (₹94,328/kg) lost 3.7 per cent.
MCX-Gold (₹84,219)
Gold futures (April) opened on a positive note and marked a high of ₹86,576 early last week. However, the trend changed direction soon and the contract saw a considerable drop.
Although there is a support ahead at ₹83,800, given the current price action, we expect gold futures to drop below this and reach ₹82,400 this week. Below ₹82,400, there is a support at ₹81,000.
In case the contract recovers, only a decisive breakout of ₹86,600 can bring the positive momentum back. Resistance above ₹86,600 is at ₹90,000.
Trade strategy: We had suggested going long at ₹84,800. As there is a chance of a further decline, exit this trade at open on Monday’s session. Avoid short positions as the extent of drop is uncertain.
MCX-Silver (₹94,328)
Silver futures (May) declined last week, slipping below the support levels at ₹96,000 and ₹95,000 (rising trendline). The chart indicates that the contract can fall more from the current level.
The nearest notable support levels are at ₹92,000 and ₹89,000. A break below the latter can turn the outlook bearish.
On the other hand, if there is a rally from the current level, it will face support-turned-resistance at ₹96,000. Subsequent price points that are potential barriers are ₹98,000 and ₹1,00,000.
Overall, going ahead, silver futures can drop and then see a recovery.
Trade strategy: Short silver futures (May) at ₹95,400 with a stop-loss at ₹96,300. Book profits at ₹92,000. Risk averse traders can avoid this position.