The precious metals continued to lose their shine in June and closed on a weak note for the third consecutive month. As in recent months, a firming US dollar and a rise in the US Treasury yield influenced sentiment towards the precious metals.
As a result, Comex gold fell 2.2% in June to close at $1,807.3 per ounce. Comex silver closed down 6.2% at $ 20.35 an ounce.
In the domestic market, MCX gold futures outperformed marginally by 0.65% to close at ₹50,517 per 10 grams. At the end of June, MCX silver futures fell 4.8% to Rs 58,887 per kg.
A weakening rupee against the US dollar helped offset the impact of fall in gold in the domestic market. The hike in import duty on gold and silver announced on July 1 will also impact domestic prices.
As predicted last month, Comex gold price remained weak in June reaching the then target of $1,770-1,780. The short-term outlook is positive and a move towards $1,850-1,860 is likely. If the price drops below $1,780, the outlook will be invalidated.
While COMEX Gold may see some correction in the near term, the overall trend remains weak, and the price is expected to resume its downtrend once the short-term rise is completed.
The volatility in the prices of Comex Silver was also in line with expectations. As seen last month, the price was weak and even declined below the $20.20 – 20.40 target area. The recent decline has pushed the price into oversold territory and a short-term bounce back is likely. A move above $20.1 would confirm short-term strength and then the price could move towards $20.85-21.
The recent volatility in gold prices on MCX in the domestic market indicates the possibility of a broadening in the short term outlook. The price may increase to ₹52,750-53,000 per 10 grams. If the price falls below Rs 49,900 then the outlook will become invalid.
Silver on MCX can also see a rise in the short term. A move above ₹58,600 would confirm a positive outlook and the price could then move towards the short-term target of ₹59,500-60,000. A fall below ₹57,300 will invalidate the positive outlook.
In short, the precious metal has hit a crucial support level and a short-term rally is likely. Expect a rise in the target area until the price falls below the support levels mentioned above.
(The author is an analyst/trader based in Chennai. Thoughts and opinions are based on analysis of short-term price movement in Gold and Silver futures at Comex and Multi Commodity Exchange of India. It is not meant to be traded or traded. Investment Advice.)