Strong dollar, yields sap metals

The short-term outlook for Comex gold is slightly positive.

Precious metals have lost sheen in the first quarter of the calendar year 2021. Comex gold recorded the third straight month of loss. Strengthening U.S. dollar and hardening U.S. Treasury yields have played a key role in keeping the prices subdued.

As a result, Comex gold closed 0.76% lower in March at $1,715.6 an ounce. The fall in Comex silver was sharper with the white metal losing 7.2% to settle at $24.53 an ounce.

In the domestic market, MCX gold futures declined by 1.2% to close at โ‚น44,935 per 10 gm. MCX silver futures declined 7.23% to close at โ‚น63,814 per kg at the end of March.

The short-term outlook for Comex gold is slightly positive. The recent slide has pushed the price to a support level and there is a case for a short-term bounce to $1,785-1,800 zone. A close above $1,752 would strengthen the case for a rise to $1,800. A move past $1,800 could drive the Comex gold price to the second target zone of $1,835-1,840.

The short-term positive outlook would be under threat if the price closes below the immediate support zone of $1,660-1,670. Until then, there would be a case for a rise to $1,800 or higher.

Comex silver moved in line with expectations and the price achieved the target of $24.5-$25.1. The short-term outlook for silver is not as encouraging. Prices could slide to the immediate support of $23.1-23.3 zone. Below $23, the price could slide to the major target of $21.2. This negative view would be invalidated if the price moves past $25.5.

Mirroring the global trend, MCX gold, too, ruled weak in March and the price achieved the target zone of โ‚น44,500-45,000 mentioned earlier.

The short-term outlook is positive and the price is likely to rise to the immediate target zone of โ‚น46,750-47,000. This would be invalidated if the price falls below the support level of โ‚น44,000-44,200.

The outlook for MCX silver appears relatively weak. Price may fall to the immediate support of โ‚น59,500-60,500. This view would be invalidated if price moves above โ‚น67,800.

To summarise, the outlook for precious metals is sort of mixed with gold suggesting the possibility of a short-term bounce, while silver could remain subdued. The broad outlook for precious metals is weak and any bounce would be a short-term countertrend move within the context of a broader downtrend.

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

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