Conflict adds lustre

Helped by the Russia-Ukraine conflict, Comex gold posted its biggest quarterly gain since September 2020. The concerns on the rising U.S. inflation rate also played a role in bolstering sentiment.

Comex gold gained 2.8% in March to close at $1,954 an ounce. Comex silver posted a slightly better performance, posting gains of 3.2% to settle at $25.13 an ounce. Mirroring the global trend, MCX gold futures gained 2.4% to close at ₹52,166 per 10 gm. MCX silver futures closed 2.4% higher at ₹67,487 per kg.

Comex gold managed to move well beyond the second target of $2,025-2,030 mentioned last month. After moving to a high of $2,078.8 in early March, the gold price has cooled off and is confined to a trading range in the past few days. A breakout from this range would set the tone for the next move.

A move past $1,970 could help Comex gold rise to $2,015-2,025. On the other hand, a fall below $1,855 would be a sign of weakness and could push the price down to major support at $1,835-1,840.

Comex silver, too, ruled firm and reached the target of $27.75-28.8 mentioned last month. The short-term outlook depends on the price action in the near term. A move past the resistance level at $26.5 will be a sign of strength and the price could then head to the $27.50-28.50 zone.

On the contrary, a drop below the support level at $23.8 would be a sign of weakness and the Comex silver price could then drop to the $21.5-22.5 zone.

In sync with the international price, the MCX gold price, too, moved well past the target price of ₹53,500-54,500 mentioned last month. The short-term outlook is positive and a move to ₹54,100-54,600 appears likely. This view would be validated if the price moves past ₹52,400. A fall below ₹49,800 would invalidate the positive outlook.

MCX silver, too, managed to hit the target zone of ₹68,500-70,100 mentioned last month. More recently, the silver price cooled off sharply in the domestic market. Only a close above ₹70,100 would reinstate positive momentum. Else, the price could either drift lower or remain confined in the range of ₹64,000-70,000.

To summarise, precious metals are in a cool-off phase after a sharp rise in the early part of March. The short-term outlook depends on the breakout past the trigger levels mentioned above. It would be prudent to wait for the price to break out past these levels before making conclusions as to the direction of the next move.

(The writer is a Chennai-based analyst / trader. This is not meant to be trading or investment advice)