07 July 2019 23:00 IST

International gold prices touched a six-year high towards the end of June.

The prices of gold and silver were on a strong uptrend in June 2019. International gold prices touched a six-year high towards the end of June. After touching a high of $1,443 an ounce, comex gold price has been largely rangebound in the past few days. Gold gained 7.8% in June to settle at $1,413.7 an ounce.

While international silver prices, too, remained strong in June 2019, the momentum witnessed in gold price was not as evident in the case of silver. Silver price gained 4.7% in June to settle at $15.25 an ounce.

Expectations of an interest rate cut in the U.S. along with a weak trend in the dollar were primary factors driving the price of precious metals to higher levels in June.

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Reflecting the positive trend in the international markets, the precious metals moved to higher levels in June, at the Multi Commodity Exchange (MCX), India. The price of gold futures gained about 7% in June to close at ₹34,206 per 10 grams. Silver futures at MCX settled at ₹37,452 per kilogram.

Based on the recent price action, the short-term outlook for gold and silver remains positive. Though there is a chance of a short-term cool off in the prices of gold and silver, such dip in prices could present an opportunity to buy gold for short-term gains.

Comex gold has support zone at $1,360-1,380 zone. Any bounce off this zone would be a strong signal that gold is on an uptrend from a short-term perspective. If the comex gold stays above the support level at $1,360, a bounce to the short-term target of $1,450-1,460 is a likely outcome. A move past $1,421 would strengthen the case for a rise towards $1,450-1,460 zone.

The short-term outlook for silver is similar to gold. A rise to the immediate target of $15.7-$16 an ounce is likely. A move past $16 would impart further momentum to the uptrend. The positive view would be invalidated if the price falls below the support at $14.4-$14.8 an ounce.

Domestically, the outlook for gold and silver is positive. The gold price at MCX is likely to rise to the immediate target of ₹34,950-35,500 per 10-grams. A fall below ₹32,800-33,000 zone would invalidate the short-term positive outlook for gold. A drop below ₹32,800 would indicate that MCX gold price is in short-term downtrend but it would not alter the medium-term positive view.

Silver price at MCX moved in line with the view expressed in the previous post and achieved the target of ₹37,150.

After touching a high of ₹38,590, silver price has cooled off a bit recently. The short-term outlook for MCX Silver is positive and is likely to touch the immediate target of ₹39,900-40,500 per kilogram. This view would be under threat if the price falls below ₹36,000. Until ₹36,000 is breached, there would be a strong case for a rise to ₹41,500 and beyond.

To summarise, the short to medium-term outlook for precious metals has turned positive. It however remains to be seen if this positive trend will spill over to the long-term time frame. Until there is evidence to the contrary, it would be safe to operate on the premise that precious metals are headed northwards.

(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 and Multi Commodity Exchange of India. This is not meant to be a trading or investment advice.)