Gold and silver prices fell for the second consecutive month as market sentiment turned negative. Comex gold closed 7.26% lower at $3,884.9 per ounce by October end, while Comex silver dropped 19.1% to $49.13. Rising crude oil prices and inflation concerns pushed local MCX rates to much lower levels too.
Gold and silver have clocked negative returns. Even the outlook for both gold and silver have turned negative. Precious metal prices are likely to drift lower until resistance level is breached.
Precious metals lost sheen last month too with both gold and silver clocking negative returns for the second consecutive month. The rise in crude oil price and concerns over rising inflation and potential hike in U.S. interest rates played a key role in denting precious metals sentiment.
As a result, Comex gold closed 7.26% lower to settle at $3,884.9/ ounce by October end. Comex silver suffered a much steeper cut of 19.1% last month to settle at $49.13/ ounce.
Mirroring global market trend, the precious metal prices settled at lower levels in the local markets too. MCX Gold fell 7.16% to settle at ₹1,38,419 per 10-gm. MCX Silver suffered a massive 20% cut in to ₹1,78,900 per kilogram.
Comex gold price slid to a one-year low on October 30 and closed well below the psychological $4,000 mark. This is a major sign of weakness as the price breached the prior support zone at $3,900. Comex gold may now slip to next support zone of $3,650-$3,750.
Price has to clear upper end of range at $4,550 to invalidate overall weak outlook. Comex silver price too was weak last month and dropped below the support level of $54.
As expected, breach of this crucial support zone imparted more weakness and price dropped to a low of $48.9 on Friday. The short-term trend is negative and the price is vulnerable to a slide to $42-$43 range. The price has to move past the resistance level at $55 to invalidate the negative outlook.
Gold slips
MCX gold price too slid below crucial support level at ₹1,41,000 mentioned last month. This imparted more weakness and the price slipped to a low of ₹1,38,249 on Friday. The short-term outlook for MCX gold is negative and the price is vulnerable to slide to ₹1,30,000-₹1,32,000. Only a move over ₹1,48,000 would invalidate the negative outlook for MCX gold.
MCX silver price turned extremely bearish last month. The price breached the crucial support zone at ₹2,15,000 which imparted further weakness and led to a drop below the psychological level of ₹2,00,000/kg Short-term outlook is weak and price looks to slide to ₹1,55,000-₹1,57,000. Only a move past ₹2,10,000 would invalidate the negative outlook.
Conclusion
To summarise, the outlook for both gold and silver have turned negative. Precious metal prices are likely to drift lower until resistance level mentioned above is breached.
(The author is a Chennai based analyst / trader. The views and opinion featured in this column is based on the analysis of short-term price movement in gold and silver futures at COMEX & Multi Commodity Exchange of India. This is not meant to be a trading or investment advice.)