Gold and silver lacked lustre in July

Precious metals were confined to a very narrow range and remained subdued for the best part of July.

The geopolitical developments in West Asia, along with the concerns relating to a potential interest rate hike in the United States, kept the prices of precious metals under check. The price of gold witnessed some recovery toward the end of July after the U.S. Federal Reserve kept the interest rates unchanged.

Gain and hit

Comex gold posted a modest 1.7% gain in July to settle at $4,107 by the end of the month. In contrast to gold, the Comex silver price took a modest 3.6% hit in July to settle at $57.75.

Mirroring the trend in the global markets, the precious metal prices took a hit in domestic markets too. MCX Gold fell 1.71% in July to settle at ₹1,43,376 per 10-gram. MCX Silver also closed on a weak note at ₹2,17,198 per kilogram, a 4.6% fall last month.

The Comex gold price was confined to the $3,949-$4,215 range in July. There is no change in the short-term negative outlook for gold that was shared last month. Gold price is vulnerable to dropping to the $3,750-$3,850 range.

As observed last month, the trend will remain weak unless the price closes above $4,410. Above $4,410, the trend could turn positive, and the price could head to the next upside target of $4,650-$4,700. But, until this breakout above $4,410 happens, expect the gold price to drift lower to the target zone of $3,750-$3,850.

The Comex silver price moved in sync with last month’s expectations and the price also dropped to the then-mentioned support zone at $54-$56. The short-term outlook for silver does not look positive and the price has to cross above $66 to invalidate this outlook. In the short term, expect the price to remain subdued and drift lower to the $52-$54 range.

As observed last month, the trend in MCX gold price has turned negative too. The gold price at MCX dropped to the then-mentioned target level of the ₹1,35,000-₹1,40,000 range. The short-term outlook remains weak and the price could now drop to the ₹1,32,000-₹1,35,000 zone. This view would be invalidated if the price moves above ₹1,49,000. Similar to gold, the trend in MCX silver price too is bearish and the price now is vulnerable to a slide to ₹1,99,000-₹2,05,000 in the near term. Only a breakout above ₹2,45,000 would invalidate this negative view.

Conclusion

To summarise, the short-term trend in gold and silver is negative post the breach of key support levels in June. The trend would remain weak until the resistance level mentioned above is not taken out.

(The author is a Chennai-based analyst/trader. The views and opinions featured in this column are based on the analysis of short-term price movement in gold and silver futures at the COMEX & Multi-Commodity Exchange of India. This is not meant to be trading or investment advice.)