Commodity strategies: How gold and silver may trade today

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By Ravindra Rao
Gold June futures continued to trade in the same range of Rs 48150-48900 after a volatile session last week. The lower band of the range got support from its 8 day EMA (48150). The next support for gold price exists around Rs 47900. Similarly, the higher Bollinger band acts as key resistance for price. Price has to move beyond Rs 48900-48950 (61.8% Fibonacci retracement of the previous fall), to resume its up trend towards Rs 49250. The strength index is hovering around 62 suggesting firmness in the trend. For the day, price is expected to move in the range of Rs 48150-48900 with a sideways bias. Only a sustained move above Rs 48950 would bring additional buying interest and push prices further towards Rs 49250.

Strategy:

Buy MCX Gold June at Rs 48250 with a target price of Rs 48900 and a stop loss at Rs 47900.

MCX Silver May futures witnessed a sharp decline towards the 20 day EMA at Rs 70600 as it failed to hold the immediate support near Rs 71800 (8 Day EMA). The key resistance for July futures exists around Rs 73300, followed by Rs 74450 (Previous Top). As noticed the bullish trend channel in Silver is intact, along with a bullish crossover of 8 and 20 day EMA which could limit the downside in price. However, failure to hold above Rs 70600 would change the trend to neutral. On the momentum front, RSI is hovering near 53, supporting the sideways bias. Hence, we expect silver to trade in the range of Rs 70500-73300 with a sideways bias.

Strategy:

Trading range for MCX Silver May futures is Rs 70600-73300.

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

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