Gold, silver lack lustre

Precious metals continued to move higher in February with Comex gold scaling past the psychological $2,900 mark. Gold prices marched into uncharted territory driven by the economic uncertainty triggered by U.S. import tariff plans. 

The price of Comex silver, however, did not share the same enthusiasm and is yet to cross its life-time highs. 

Under dollar’s shadow

However, the strengthening of the U.S. dollar led to a cool-off in precious metals prices in the past few days. 

After touching a new life-time high of $2,974 a few days ago, Comex gold cooled off recently and settled at $2,848.5 an ounce by the end of February, representing a modest gain of 0.48%. Comex silver closed 2.38% lower at $31.49 an ounce by the end of February.

Better local trends 

The performance of precious metals in the domestic market was relatively better, helped by the sustained weakness in the value of the Indian rupee. 

MCX gold gained 2.42% to settle at ₹84,219 per 10-grams at the end of February. MCX silver closed 0.91% lower at ₹94,328 per kilogram. 

Comex gold price turned a bit weak in the past few days and this weakness is likely to persist in the short-term. After this anticipated cool-off, the price is expected to resume its long-term uptrend. 

Next target

As highlighted in the recent updates, the next major target for Comex gold is $3,050-$3,100. The positive outlook for gold would be under threat only if the price closes below $2,740-$2,760 range. 

Comex silver continues to be a relative under performer in comparison to gold.

The short-term outlook is not too positive for silver and the price could drop between $29.8 and $30.5. A move above $33.6 would indicate the resumption of the long-term uptrend. Until this breakout happens, expect silver price to either remain range bound or drift to lower levels.

Mirroring the sentiment in the global markets, the MCX gold price, too, managed to hit record highs a few days ago. The price has however been consolidating in a range in the past three days. A breakout above ₹86,800 would impart momentum to the uptrend and help gold price reach the next target of ₹88,500-₹89,500 range. 

Until this breakout happens, expect domestic gold price to remain subdued. The immediate support cum target zone for MCX gold is ₹80,900-₹81,500.

MCX silver price too ruled firm in the first half of February and the price also hit the target zone of ₹1,00,500-₹1,05,500 mentioned last month. The short-term outlook for silver is negative and the price could drift lower to ₹89,500-₹90,500 zone. Expect weakness to persist unless the price moves above ₹97,500.

To summarise, the precious metal price is likely to remain subdued in the short-term. The long-term trend still remains positive.

(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 movements in gold and silver futures at COMEX & Multi Commodity Exchange of India. This is not meant to be a trading or investment advice.)