Commodity strategies: How gold, silver may trade today

Commodity strategies: How gold, silver may trade today

By Ravindra Rao

MCX Gold futures are trading nearly 1.5 per cent down after the Fed pushed forward projections for interest rate hikes into 2023. The short-term trend has turned negative as price breached the lower band of the rising trend channel. A trade through Rs. 48000 reaffirmed the downtrend. The next downside support is around Rs. 47550 (38.2 per cent Fibonacci level), followed by Rs. 47200. Only a sustained move above Rs. 48900 (Midline of Bollinger Band) will change the trend to positive. The momentum indicator has also weakened below 50, suggesting bearishness. The range for the day is Rs. 47200-48000.

Strategy:

Sell MCX Gold August futures at Rs. 47750 with a target of Rs. 47200 and a stop loss at Rs. 48000.

MCX Silver July futures also moved lower following the yellow metal. Major support holds around Rs. 69600, which is 38.2 per cent Fibonacci level of the bull rally. Near-term resistance is seen near Rs. 71800 (20-day EMA), followed by Rs. 72850. Short-term momentum has turned negative as RSI broke down to a new low which suggests accelerating negative momentum. So for the day, the price might continue to move in the range of Rs. 69600-71800 with a sideways to downside bias. Only a closing break below Rs. 69600 would bring in renewed selling pressure and push the price towards Rs. 68250.

Strategy:

Sell MCX Silver July futures at Rs. 70750 with a target of Rs. 69600 and a stop loss at Rs. 71500.

(Ravindra Rao, CMT, EPAT is VP-Head Commodity Research at Kotak Securities)

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