Commodity strategies: Gold, silver


Ravindra Rao


MCX Gold futures rallied significantly during the end of the week after FOMC Chair’s speech on Friday. Gold has again rallied towards its 200-day EMA at Rs 47,600 but failed to move above the downward sloping trend line resistance and previous top of Rs 47,750. However, prices have just ended above the 20- and 50-day EMA at Rs 47,260 and Rs 47,450, respectively, suggesting a recovery phase. Key resistance is seen near Rs 47,750, followed by Rs 48,000. On the downside, below Rs 47,260, Rs 46,800 holds major support. On the momentum front, RSI has moved above the neutral zone (50) at 53, suggesting a sideways to higher trend. So for the day, the price is expected to move in the range of Rs 47,260-Rs 47,750 with a sideways to higher bias. Only a close above Rs 47,750 would bring fresh buying interest in gold futures.

Trading Range: Rs 47,260-47,750

MCX Silver futures erased its earlier losses on Friday following Fed chair Powel’s speech and closed with a gain of 0.50 per cent. But the price is still trading below its key resistance of 20-day EMA at Rs 64,700, which could act as immediate resistance for the day. On the lower front, Rs 62,900 and Rs 62,500 holds key support for the day. Meanwhile, the bullish crossover of the MACD line above its 9-day average has supported the bullish view. On the RSI front, positive divergence on the short-term chart has also supported the recovery in price. So as long as Rs 62,500 mark holds, the price is expected to move towards Rs 64,700. Only a sustained move above Rs 64,700 would bring fresh buying interest and push silver towards Rs 65,500.

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Trading Strategy: Buy MCX Silver Sep at Rs 63,400. Target price: Rs 64,700. Stop loss: Rs 62,500

(Ravindra Rao is CMT, EPAT, VP-Head Commodity Research, Kotak Securities Ltd. Views are his own)



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