Gold may take a breather around Rs 56,850; Trading range narrows for Silver

The overall bias for Gold remains bullish, with near support seen at Rs 55,900 level. The Bollinger Bands indicate a likely trading range of Rs 2,000-odd points for the MCX Silver March futures.

The MCX Gold futures have rallied over 12 per cent in the last 11 weeks, and are now again on five-week winning streak, up nearly 4 per cent. The overall bias continues to remain bullish, but considerable resistance is expected around Rs 56,850 level.

On the other hand, the anticipated trading band for Silver futures has now narrowed down to Rs 2,000-odd points, thus indicating the possibility of a breakout in the near future.

Gold

Bias: Bullish

Last Close: Rs 56,324

Target: Rs 56,850

Support: Rs 55,900

Resistance: Rs 56,580

The MCX Gold futures have logged gains in the last five straight weeks, up 3.7 per cent during the period as demand for the safe haven asset rose amid fears of an economic slowdown globally. 

In fact, in the last 11 weeks Gold prices have appreciated over 12 per cent.

The MCX Gold futures continue to trade with a bullish bias on the daily and the weekly charts, as the precious metal trades firmly above all the key moving averages. However, given the steady ascend select momentum oscillators on both the time-frames were now either in or nearing overbought zone.

The near-term bias for Gold futures is likely to remain bullish as long as Gold trades above Rs 55,900-level, suggest charts. On the upside, Gold prices need to sustain above Rs 56,300-level for a push towards Rs 56,580 and then to Rs 56,850.

Accordingly to the weekly and yearly Fibonacci chart, the Rs 56,850 level may act as a hurdle in the short-term. Meanwhile, the quarterly Fibonacci chart indicates on sustained trade above Rs 56,235 Gold futures can rally to Rs 57,130 level.

According to the weekly Fibonacci chart, this week the MCX Gold February futures are likely to trade in a range of Rs 55,800 to Rs 56,850; with the Gold prices expected to seek support around Rs 56,140 - Rs 56,000 - Rs 55,900, and may face resistance around Rs 56,510 - Rs 56,650 - Rs 56,750.

On Monday, the MCX Gold February futures contract is likely to seek support around Rs 56,220 - Rs 56,145 - Rs 56,035, while on the upside the contract may counter resistance around Rs 56,500 - Rs 56,560 - Rs 56,615.

Similarly, the MCX Gold Mini February futures is expected to seek support around Rs 56,130 - Rs 56,060 - Rs 55,960, and on the upside the contract may face resistance around Rs 56,390 - Rs 56,440 - Rs 56,500 today.

Silver

Bias: Neutral

Last Close: Rs 69,427

Support: Rs 69,160

Resistance: Rs 70,300

After a brief period of volatility, the MCX Silver futures may look to resume the up move as the Silver March contract has closed above its 20-DMA (Daily Moving Average) for two consecutive trading sessions, and the same is likely to act as an immediate support at Rs 69,160-odd level.

Further confirmation on the same can be ascertained on sustained trade above Rs 70,300-level, i.e. the higher-end of the Bollinger Bands on the daily chart.

Overall the Bollinger Bands on the daily chart have narrowed down to Rs 2,000-odd points, indicating a tight trading range of Rs 68,000 to Rs 70,300. A break on the either side, could give a sharp swing.

Among the key momentum oscillators, the MACD (Moving Average Convergence-Divergence) and the Slow Stochastic are showing some signs of a turnaround. The ADX index, however, remains low suggesting lack of strength in the existing trend.

According to the weekly Fibonacci chart, the MCX Silver March futures may seek support around Rs 68,585 - Rs 68,325 - Rs 68,065, while resistance on the upside can be expected around Rs 70,270 - Rs 70,530 - Rs 70,790 this week.

On Monday, Silver March futures are likely to seek support around Rs 69,130 - Rs 68,900 - Rs 68,600, while on the upside the contract may counter resistance around Rs 69,940 - Rs 70,100 - Rs 70,260.

Similarly, MCX Silver Mini February futures could seek support around Rs 69,910 - Rs 68,900 - Rs 68,615; whereas on the upside the Mini contract may face resistance around Rs 69,850 - Rs 70,000 - Rs 70,145 today.

Further, the MCX Silver Micro February futures are likely to seek support around Rs 69,105 - Rs 68,905 - Rs 68,615; whereas the contract could face resistance around Rs 69,850 - Rs 70,000 - Rs 70,140 on Monday.