Precious metals lost their sheen in April and both gold and silver ended the month on a weak note. A rise in the dollar, coupled with the prospect of aggressive interest rate hikes by the US Federal Reserve, played a key role in keeping the precious metal prices low in April.
Comex gold fell 2.2% in April to close at $1,911.7 an ounce. Comex silver closed down 8.2% in April at $ 23.09 an ounce.
Looking at the global trend, MCX gold futures fell 0.79% to Rs 51,754 per 10 grams. At the end of April, MCX silver futures closed 5.6% lower at Rs 64,349 per kg.
Comex gold price is still limited in $1,880-$2,005 range. The short-term outlook depends on the direction of the breakout from this range. Although there was a brief strike a few days ago, the price immediately corrected sharply below the lower end of the range.
The short-term outlook is positive and a move towards $1,960-1,980 is likely. If the price closes below $1,850, the positive outlook will be invalidated. A decline below $1,850 could propel the price towards the 1,800-1,810 area.
The short-term outlook for Comex silver looks weak and the price could decline further towards the immediate target area of $21.75-22.20. The price needs to move above $24.5 to invalidate the negative outlook. Breaking $21.5 would be a major sign of weakness and COMEX could push silver price towards the $20.40-20.50 range.
MCX Gold price surpassed the positive trigger level of ₹52,400 which was mentioned last month. The price touched an all-time high of ₹53,663 on April 18, before the fall. Short term outlook remains positive.
A previous move of ₹53,350 will propel MCX Gold price towards the key target zone of ₹54,500-55,000. The positive outlook will be invalidated if it closes below ₹49,500.
As seen last month, MCX Silver remained weak and settled below the lower end of the trading range at ₹64,000. A breach of the lower end of the trading range is a sign of weakness and the price may move lower towards the ₹59,500-60,000 area. A close just above ₹67,000 will invalidate the negative outlook for MCX Silver.
In short, the short-term outlook for the precious metal depends on the breakout of the trigger levels mentioned above. As seen last month, it would be prudent to wait for the price to break one of the levels before concluding with the direction of the next move.
(The author is a Chennai-based analyst/trader. Not meant to be trading or investment advice)