Gold August futures closed nearly unchanged on Wednesday as price continued to consolidate in the wider range, between Rs. 46600-47380. Price rallied towards the higher band of the range but erased its gains as it faced stiff resistance near 250-day EMA at Rs. 47380. Price has to break above the said resistance level to extend its gains towards Rs. 47750-47900 levels. On the downside, Rs. 46600 holds the key support, followed by Rs. 46220 (61.8 per cent Fibonacci retracement level of the uptrend). The bearish crossover of 10 and 50-day EMA has diminished the bullish bets in gold futures. On the momentum front, MACD has reversed, as the histograms turned negative, suggesting a sideways to weaker trend. So for the day, the trading range would be between Rs. 46600-47380. Only a closing break on either side would bring more clarity to the trend.
Strategy:
The trading range for MCX Gold August futures lies between Rs. 46600-47380.
MCX Silver July futures received strong support from Rs. 67000 levels and rebounded towards the nearest resistance zone at Rs. 68850. However, the price failed to capitalize its gains and closed nearly unchanged with the formation of a Doji candle. If silver manages to settle above Rs. 68900, then it would test the next key resistance levels of Rs. 69750-70200. On the other hand, key support for July futures exists around Rs. 66900 (61.8 per cent Fibonacci retracement level), which coincides with the lower Bollinger band. A decline below the key support would extend the downside towards the next support at Rs. 65500. Short-term momentum has turned negative as RSI is hovering near 36. So for the day, the price might continue to move in the range of Rs. 66900-68900 with a sideways bias. Only a close below Rs. 66900 would extend the weakness towards Rs. 65500.
Strategy:
The trading range for MCX Silver July futures lies between Rs. 66900-68900.
(Ravindra Rao, CMT, EPAT is VP-Head Commodity Research at Kotak Securities)
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