Precious metals lost their sheen and closed on a weak note at the end of September. The strengthening of the U.S. dollar, on expectations the U.S. Federal Reserve could soon begin winding down its economic support measures, played a key role in denting sentiment towards precious metals.
As a result, Comex gold fell 3.36% to settle at $1,757 an ounce at the end of September. Comex silver, too, closed on a weak note. The white metal dropped 8.2% to close at $22.05 an ounce.
In the domestic market, MCX gold futures dropped 1.58% to close at ₹46,521 per 10 gm. MCX silver futures witnessed a steeper cut of 5.9% to settle at ₹59,617 per kg at the end of September.
The sharp fall in price in September has confirmed the short-term weak trend in Comex gold. The recovery witnessed in the earlier months comes across as a pull-back within an overall downtrend.
The short-term outlook for Comex gold is negative. The price is likely to fall to the immediate target range of $1,660-1,670. A move below $1,670 would lend further weakness and could push the price lower to the next target of $1,610-1,625. Unless Comex gold moves above $1,840, there would be a strong case for a fall to $1,660 and lower.
Comex silver price has fallen sharply which has pushed the price way below its short-term moving average. The price could snap back towards the short-term moving average. While this short-term support is a possibility, the overall trend remains weak. The price is likely to resume its downtrend on the completion of the anticipated pull-back rally. Until Comex silver moves above $25, there would be a case for a fall to the $19.75-20 zone.
MCX gold is still confined within the broad range of ₹43,500-49,000. The near-term trend depends on the direction of the breakout from this range. Above ₹49,000, gold price could head to the short-term target of ₹51,300-51,500. On the other hand, a close below ₹43,500 would be a sign of weakness and could push the price to ₹41,800-42,000.
As anticipated last month, MCX silver ruled weak, and the price almost dropped to the then mentioned target price of ₹57,500-58,000 range.
The short-term outlook for silver remains weak and a slide to ₹54,500-55,000 appears likely. This view would be invalidated if the price rises past ₹63,900.
(The author is a Chennai-based analyst/trader. The views and opinion featured in this column is based on the analysis of short-term price movement in gold and silver futures at Comex and the Multi Commodity Exchange of India.)
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