Trading strategies for gold & silver

By Ravindra Rao

Gold and silver futures dipped in the opening trade on Thursday tracking trend in international market as dollar spiked on fear of rising Covid-19 cases in Europe and the US. Here's the trading strategy for the bullion counters:

Gold

MCX GOLD has breached the lower bound of the consolidation phase (Rs 50,540-51,200) and retraced 50 per cent of its recent rally at Rs 50,350. Immediate resistance is at Rs 50,750, followed by Rs 50,950 which could be the supply zone for the metal in near term. However, major support for gold holds around Rs 50,100. Only failure to hold could take the precious metal further down. The strength index (RSI at 44.5) is supporting the bear case. We expect gold to move in the band of Rs 50,100-50,950 with sideways to downside bias.

Strategy
Sell MCX Gold Dec at Rs 50,750

• Target: Rs 50,250
• Stop loss: Rs 50,950

Silver
MCX SILVER hit the lower bound of its broad consolidation range (Rs 59,300-64,200) after breaching the trend channel support at Rs 61,200. Meanwhile, immediate resistance is seen at Rs 62,600, which could act as key trend reversal zone. As long as Rs 62,600 resistance holds, price is expected to move in the band of Rs 62,600-59,300 with sideways to downside bias. Meanwhile, the momentum indicator (RSI) is hovering below 50 at 36.80 indicating bear strength.

Strategy
Sell MCX Silver Dec at Rs 61,300

• Target: Rs 59,300
• Stop loss: Rs 62,600

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