Commodity strategies: How gold and silver may trade today

By Ravindra Rao

MCX Gold April futures held the key support near Rs 44,975 (which is 78.6% Fibonacci extension of the recent down trend) and witnessed a rebound. Meanwhile, price is still hovering in the downward sloping channel with immediate resistance near Rs 45,850 (5 day EMA), followed by Rs 46,850 (21 Day EMA). As mentioned before, key support for April future exists around Rs 44,975, followed by Rs 44,600. On the momentum front, RSI is hovering in the oversold zone (31), indicating weakness. However this oversold nature of RSI could limit more downside in gold prices. Going by the above analysis price is expected to move in the band of Rs 44,975-45,850 with sideways to downside bias.

Strategy:
Sell MCX Gold April at Rs 45,700 with a target of Rs 45,100 and a stop loss at Rs 45,950.

MCX Silver May futures witnessed good rebound as price held the key support near Rs 66,400. Meanwhile, price is trading around the trend line resistance of Rs 69,600, which could be the first hurdle for price, followed by Rs 70,780 (multiple top). However a negative crossover of 5 and 21 day EMA suggests some correction. On the momentum fort, RSI is hovering around 50(51) suggesting a sideways trend. Hence for the day, price is expected to move in the range of Rs 69,600-67,400 with sideways bias. Only a close on either side of the range would give direction to price.

Strategy:
Sell MCX Silver May at Rs 69,600 with a target of Rs 67,500 and a stop loss at Rs 70,800.

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