Yellow Metal Trades Weak, Silver Too Falls Over 1%

Source: Reuters

Gold was trading weak in Indian markets on January 14, tracking a muted trend in the international spot prices. March Silver futures also fell more than 1 percent in the morning trade.

On the Multi-Commodity Exchange (MCX), February gold contracts were trading lower by 0.89 percent at Rs 48,864 for 10 grams at 0920 hours. March silver was trading 1.2 percent lower at Rs 65,225 a kilogram.

Experts are of the view that precious metals are likely to remain volatile but investors can deploy buy on dips strategy amid a decline in the US bond yields. Gold can be bought on the decline for an upside target of Rs 49,500 per 10 gm.

On January 13, gold and silver futures contracts settled positive in the international market. February gold futures contract settled at $1,854.90 per troy ounce and March silver at $25.57 per troy ounce.

Despite strength in the rupee, both precious metals settled on a positive note in the domestic market as well.

Gold and silver prices gained amid safe-haven buying due to rising US fiscal deficit and the impeachment of President Donald Trump, experts said.

Precious metal prices were also supported by a decline in the US bond yields, they said.  The yield on the 10-Year note slid for the second day in a row, declining a cumulative 2.6 percent for the week after a 22 percent jump to March highs in the previous week.

“Despite the decline in the bond yields, the dollar index traded steady and limiting gains in the precious metals. We expect both the precious metals to remain volatile in today’s session amid volatility in the dollar index and US president impeachment,” Manoj Jain, Director (Head-Commodity & Currency Research) at Prithvi Finmart told Moneycontrol.

“At MCX, Gold has support at 49,050-48,800 and resistance is placed at 49,580-49.800 levels. Silver has support at 65,200-64,700 and resistance at 66,600-67,500 levels. We suggest buying in the dips in both the precious metals,” he said.

Jain is of the view that gold can be bought at around Rs 49,050 with a stop loss of Rs 48,770 for the target of Rs 49,500 and silver can be bought around Rs 65,200 with a stop loss of Rs 64,700 for the target of Rs 66,600.

Trading strategy

Sriram Iyer, Senior Research Analyst at Reliance Securities

International spot gold and silver prices ended marginally in the red on January 13, despite data showing a rise in consumer prices in the United States and expectations that more fiscal stimulus from the Joe Biden administration could trigger higher inflation. However, both Comex gold and silver prices ended marginally in the green.

Domestic bullion could trade flat to higher On January 14 this morning, tracking international prices.

Technically, MCX Gold February is sustaining above 49,000 but a hurdle is near 49,500 and it is only above this level that the metal will see a bullish reversal. Prices could trade in the Rs 48,900-49,500 range in the coming session.

MCX March silver ended on a positive note, where Rs 65,000-64,400 holds strong support above which it will continue its bullish momentum up to Rs 66,700-67,200 levels.

Ravindra Rao, VP- Head Commodity Research at Kotak Securities.

Comex gold was trading 0.45 percent lower near $1,837/oz after gaining a 0.6 percent the previous day. Gold continues to trade in a broad range as support from higher US stimulus, rising virus cases, impeachment proceedings against President Trump is countered by vaccine progress, and weaker investor interest as is evident from ETF outflows.

Gold may remain choppy unless there are fresh triggers, however, expectations of a higher US stimulus may continue to support prices.

Disclaimer: The views and investment tips expressed by experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

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