After a sharp fall in September, precious metals regained a bit of their lost sheen in October. The weakness in the U.S. dollar along with concerns pertaining to rising inflation played a key role in helping precious metals close on a positive note at the end of October.
Comex gold gained 1.5% to settle at $1,783.9 an ounce at the end of October. Comex silver, too, closed on a strong note. The white metal gained 8.6% to close at $23.95 an ounce.
In the domestic market, MCX gold futures gained 2.4% to close at ₹47,635 per 10 gm. MCX silver futures closed on a firm note, gaining 8.3% to settle at ₹64,534 a kg.
After the sharp fall September, Comex gold price recovered marginally in October. This, however, has not altered the overall weak outlook for the yellow metal. Unless the price moves above $1,840, there is a possibility of Comex gold sliding to the $1,660-1,670 range.
A fall below $1,750 would strengthen the case for a slide to the $1,660-1,670 range. In essence, either a move above $1,840 or a fall below $1,750 would set the tone for the next move in Comex gold.
As anticipated last month, there was a recovery in the price of Comex silver. The recovery however did not help the price cross the key resistance level at $25. A move past $25 would be a sign of strength and could help the white metal move to the next target of $26.75-27.50.
A fall below $22.8 would be a sign of weakness and could push the silver price to lower levels of $20.5-21. The short-term trend in Comex silver hinges on the breakout above $25 or a fall below $22.90.
The short-term outlook for MCX gold is positive and the price could head to the immediate target of ₹50,500-51,000. A move past ₹48,300 would confirm the positive outlook. This would be under threat if the price slides below ₹46,200. As long as this level is not breached, there would be a strong case for a rise to ₹50,500.
Short-term outlook for MCX silver is positive and this would be confirmed on a move past ₹67,000. A move above this level could help MCX silver head towards the next target of ₹70,000-₹70,500. The positive outlook would be under threat on a close below ₹61,500
To summarise, the short-term outlook for precious metals is sort of mixed. A move past the levels mentioned above would influence the next major directional move in gold and silver. In the domestic market, there appears to be a case for a short-term rise in precious metals.
(The author is a Chennai-based analyst / trader. This is not meant to be trading or investment advice)