Precious metals remained in a broad range, devoid of any significant trend in August. After dropping to a low of $1,677, there was a sharp recovery in Comex gold price in the latter half of August. The weakness in the U.S. dollar played a key role in the recovery of precious metals’ prices. The drop in the U.S. bond yields, too, helped in the recovery of precious metals.
Comex gold closed almost unchanged at $1,818.1 an ounce at the end of August. Comex silver however closed on a weak note. It fell 6% to $24.1 an ounce at the end of August.
In the domestic market, MCX gold futures dropped 1.8% to close at ₹47,120 per 10 gm. MCX silver futures witnessed a steeper cut of 7.7% to settle at ₹63,366 per kg at the end of August.
The short-term outlook for Comex gold is positive. The price is likely to rise to the immediate target of $1,915-1,920 range. A move past $1,840 would confirm the positive outlook for gold.
The short-term positive outlook for Comex gold would be under threat if the price falls below the $1,720-1,740 zone. As long as this support zone is not breached, there would be a case for a move to $1,915 and higher. Below $1,720, Comex gold could drop to the $1,640-1,650 zone.
The Comex silver price bounced off the key support at $21.75-22 zone, which is a sign of strength. A move past $24.5 would confirm the positive undertone and could push the price to the near-term target of $25.50-26.
On the other hand, a fall below $21.5 would be a major sign of weakness and Comex silver could then slip to the next downside target of $20-20.5.
MCX gold is still confined within the broad range of ₹43,500-49,100. From a short-term perspective, MCX gold will gain upward momentum on a move above ₹48,500. Above ₹48,500, the price could head to the short-term target of ₹50,500-51,000. On the other hand, a close below ₹45,600 would be a sign of weakness and could push the price to the ₹43,500-44,000 range.
As anticipated last month, MCX silver ruled weak, and the price dropped way below the then mentioned target price range of ₹63,000-63,500. The short-term outlook for silver remains weak and a slide to ₹57,500-58,000 appears likely. This view would be invalidated if the price rises past ₹68,400.
To summarise, the short-term outlook for precious metals is still unclear as the prices are confined in a range. A breakout past the levels mentioned above would influence the direction of the short-term move.
(The author is a Chennai-based analyst/trader. This is not meant to be trading or investment advice)