Gold and Silver - July 23, 2021 - Reliance Securities
(Time Zone: UTC)
Mr. Sriram Iyer, Senior Research Analyst at Reliance Securities
International and domestic gold prices are on the way for the 1st weekly loss this week.
It was a lackluster week of trade for both gold and silver.
Prices initially moved higher as growing inflationary pressures pulled the U.S. benchmark Treasury yields lower.
However, prices fell from the highs of the week as risk appetite resumed with equities and U.S. bond yields rebounding to curb safe-haven bullion bids.
The U.S. Dollar found support this week as the rising covid-19 infections (Delta Variant) pushed investors towards the safe haven appeal of the greenback and also kept upside limited.
On the central bank front, European Central Bank pledge to keep interest rates at record lows for even longer and dovish comments by ECB President Christine Lagarde also suggests that low rates are here to stay.
However, the dovish comments weighed on the Euro and pushed the dollar higher and in turn weighed on gold.
Meanwhile, silver rebounded from weekly low after supported by a reflation trade with higher economic growth and rising inflation was positive for silver, which have industrial applications.
However, overall weakness of gold kept the upside limited in silver too this week.
International gold and silver prices have could remain range bound to weak in the coming week.
Improved risk appetite will cap upside, while the movement of the dollar will also move the markets next week.
However, investors will await cues from the U.S. Federal reserve meeting next week.
The Fed's policy meeting next week will be followed by comments from Chair Jerome Powell which could continue to suggest that the central bank would remain accommodative despite recent spikes in inflation readings.
So, this could keep downside limited.
On the other hand, other data like durable goods orders and U.S GDP data for 2nd quarter could also drive markets.
On the charts, range for LBMA spot gold will be between $1790-1830 levels and only a breakout from the range will provide the markets with new ranges.
On the domestic front, MCX August range is Rs.47000-48000 levels and only a breakout from the range will provide the markets with new ranges.
For Silver, LBMA Silver is trading below a 21-Weekly Moving Average near $26.25 and 50-Weekly Moving Average at $25.80 level and below which could pull prices $23.80-$22.70 levels. Resistance is at $25.80-$27.00 levels.
If MCX Silver September continues to trade below 68700 we could see 66600-64500 levels. Resistance is at 68700-68900 levels.
So, in the short run, markets could remain range bound, and traders could remain away or initiate a sell.
In the longer run, investors should wait for the right price to enter the market for a buy.
Strategy: - Gold August: - Sell on rallies near 47800 with a stoploss at 48000 and a target at 47300.
Strategy: - Silver September: - Sell on rallies near 67500 with a stoploss at 68500 and a target at 65000.
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