Escalating geopolitical tensions helped precious metals end February at seven-month highs. News flow related to US inflation data and its impact on interest rates will also play a role in influencing the price of precious metals. The Russian attack on Ukraine and its associated impact will be the main factor affecting the price of precious metals in the near future.
Comex Gold gained 5.8% to close at $1,900.7 an ounce at the end of February. Comex silver was a relatively better performer in February, posting gains of 8.8% to settle at $24.36 an ounce.
In line with the global trend, MCX gold futures gained 6.6% to close at £50,670 per 10g. MCX silver futures ended February up 6.7% at ₹65,901 per kg.
Comex gold prices finally managed to break out of the previous range. The move above the positive trigger level of $1,880 is a sign of strength. As expected, the break above this trigger level helped the price upside momentum to the upside.
The short-term outlook is positive and Comex Gold could rally into the $1,975-$1,990 range. A move above $1,995 could provide further upside momentum. Beyond $1,995, a rally to $2,025-$2,030 is possible. The upside outlook would be at risk if the price drops below $1,840.
As expected over the past month, Comex silver has proved resilient, hitting the then stated target of $25.5-$26. The price is now at the key resistance level and a break above $26.5 would propel Comex silver prices to the next target in the $27.75-$28.8 range. The bullish view on silver would be valid as long as the price trades above $23.8.
MCX gold price managed to surpass the positive trigger level of ₹49,500. In line with last month’s expectation, this breakout pushed the price towards the ₹51,500-52,500 target. The short-term outlook is positive and domestic gold prices could head for the next target of ₹53,500-54,500. This view would become obsolete if the price fell below £47,500.
After consolidating in a tight range, MCX silver price also saw a breakout and moved above the positive trigger level of ₹67,500. This is a sign of strength and the MCX silver price could now move into the £68,500 – £70,100 range. The near term positive outlook would be jeopardized if the price closes below ₹64,400.
In summary, the precious metals managed to break out of the previous consolidation. This is a positive sign and the short-term uptrend should continue. Until the above invalidity limits are not breached, the precious metals are likely to head towards the above targets.
(The author is a Chennai based Analyst/Trader. The views and opinions contained in this column are based on analysis of short term price movements in Gold & Silver Futures on the COMEX & Multi Commodity Exchange of India. This is not intended to be a trading or investment advice.)