Commodity strategies: Gold & silver

By Ravindra Rao

MCX Gold witnessed a sell off from higher levels as the bulls failed in keeping it above Rs 48000. Although the short term trend is positive, some more corrective move is possible. Resistance for the day is pegged at Rs 47700 and strong resistance near Rs 48000. RSI is close to 50 indicating a sideways move. Support is near Rs 47290 and strong support is close to Rs 47000. For the day, we expect price to trade with a negative bias until Rs 48000 holds. Immediate downside objective would be Rs 47290. Only a break above Rs 48000 might once again give bulls the edge to take it past Rs 48400.

Strategy:
Sell MCX Gold June at Rs 47700 with a target price of Rs 47290 and a stop loss at Rs 47960.

MCX Silver followed gold as it fell to the support near Rs 68400. For the day, the trend continues to be sideways to down until the price is below Rs 69500. RSI is slightly below 50 which might support the bears. Resistance zones near Rs 68800-69000 where selling might pitch in. Similarly, immediate support is near Rs 68400 and a strong support is near Rs 68000. Going by the above evidences, we expect silver to trade in the range of Rs 69000-68400. A break at Rs 69500 or 68000 would give a direction to the price.

Strategy:
Sell MCX Silver May at Rs 69000 with a target of Rs 68290 and a stop loss at Rs 69500.

(Ravindra Rao, CMT, EPAT is VP-Head Commodity Research at Kotak Securities)