Trading strategy for gold & silver

By Ravindra Rao

Gold and silver future prices rose in the opening trade on Tuesday, tracking trend in international market amid rising Covid-19 cases in western countries. Here is a trading strategy for the bullion counters:

Gold
MCX GOLD has witnessed a strong rebound from the lower band of the rising trend channel support placed near Rs 50,500. The immediate key resistance is at Rs 51,200. Sustenance above Rs 51,200 might push the price to Rs 51,450. Momentum indicator Relative Strength Index is at 53.75, favoring a sideways to positive trend.

• Strategy:

Buy MCX Dec Gold at Rs 50,800 with a target of Rs 51,200. Stop loss is suggested at Rs 50,500.

Silver
MCX SILVER has erased its losses after testing the key support level of Rs 61,100. Meanwhile, the immediate resistance is at Rs 63,200. Only a sustained move above it might push the price further towards Rs 64,200. As long as Rs 61,200 holds, the price is expected to move higher towards the initial target of Rs 63,200. However, the momentum indicator (RSI) is hovering around 50 at 47.00, suggesting sideways trend.

• Strategy:

Buy MCX Silver Dec at Rs 61,750 with a target of Rs 61,750. A stop loss is suggested at Rs 61,100.

(Ravindra Rao is VP-Head commodity research, Kotak Securities )