Commodity strategies: How gold and silver may trade today

By Ravindra Rao

MCX Gold April future has breached the key support of Rs 44,975 (which is 78.6% Fibonacci extension of the recent down trend) and fell towards Rs 44,560. Meanwhile, price is trading below the lower bound of the downward sloping channel with immediate resistance near Rs 45,550 (5 day EMA), followed by Rs 46,660 (21 Day EMA). On the downside, key support holds around Rs 44,550, followed by Rs 44,200. The strength index RSI is hovering in the oversold zone (28) that might limit more downside in gold prices. Going by the above analysis, price is expected to move in the band of Rs 44,550-45,550 with sideways to downside bias.

Strategy:
Sell MCX Gold April at Rs 45,260 with a target of Rs 44,600 and a stop loss at Rs 45,600.

MCX Silver May future held the key support near Rs 66,400 as price witnessed rebound from the same zone on multiple occasions this week. Meanwhile, price is trading around the trend line resistance of Rs 69,600, which could be the first hurdle, followed by Rs 70,780 (multiple top). However, a negative crossover of 5 and 21 day EMA suggests corrective move. On the momentum front, RSI is hovering around 50 (48) suggesting a sideways trend. Hence for the day, price is expected to move in the range of Rs 69,600-66,400 with a sideways bias. Only a close on either side of the range would give direction to prices.

Strategy:
Sell MCX Silver May at Rs 68,500 with a target of Rs 66,600 and a stop loss at Rs 69,600.

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