Weak rupee rescues domestic gold…


In the domestic market, a weak rupee helped prop up gold prices for most of the week. However, the sharp fall in global prices toward the weekend impacted domestic prices. Gold futures traded on the MCX ended the week about a per cent lower at 26,534 per 10 gm. MCX-Silver, on the other hand, tumbled 3 per cent for the week to close at 37,888 per kg.

The rupee gained ground after recording a low of 61.95 on Wednesday. But the strength that the dollar gained on Friday could keep the rupee under pressure. So if rupee declines below 62 in the coming week, it could target 63. This could help limit the fall in domestic gold prices. On the charts, the outlook for the MCX-gold futures contract is bearish. It has failed to breach the psychological 27,000-mark despite several attempts made last week.

This could keep the contract under pressure. While the contract trades below 27,000, there is a danger of it falling to 26,300 and even 26,050 in the coming week. On the other hand, the outlook will turn positive if the contract records a strong close above 27,000. The next targets will be 27,250 and 27,485.

The MCX-silver futures contract tested its crucial channel support at 37,200 last week and has bounced back.

The chances of re-testing this support cannot be ruled out. Whether 37,200 is broken or will hold will decide the next leg of movement for MCX-silver. A reversal from this support will result in a rally to 39,650 in the coming days. On the other hand, declines below 37,200 could drag it to 36,000.

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