Bullion Cues: Support in focus

The prices of precious metals experienced a slight decline last week. Gold and silver both witnessed a drop, with gold futures (October contract) falling by 0.2 percent and silver futures (September contract) losing 2.2 percent. The domestic market saw gold futures at ₹1,43,376 per 10 grams declining by 0.6 percent, while silver futures at ₹2,17,198 per kilogram dropped by 2.2 percent.

Gold futures (October) had been trending sideways within a narrow band of ₹1,42,500-1,45,000 over the past week. However, the price action suggested that the contract had found a new base at ₹1,41,000. If gold futures move upwards following this support, it could reach ₹1,47,500. Conversely, if the support at ₹1,41,000 is breached, the contract may drop to ₹1,34,000.

Trade strategists with a high risk tolerance could consider going long at ₹1,42,000, targeting ₹1,49,000 and setting a stop-loss at ₹1,39,500. Alternatively, if the support at ₹1,40,000 is breached, they could opt for a short position with a stop-loss at ₹1,42,000, aiming for a target of ₹1,34,000.

Similarly, silver futures (September) was largely trading in a sideways band, with a loss of 2.2 percent for the week. The contract had formed a support at ₹2,14,000. Should there be a rebound on this support, silver futures could rally to ₹2,27,000. A breakout of this support could lift it to ₹2,34,000. If the contract breaches the support at ₹2,14,000, it could decline to ₹2,10,000.

Support below ₹2,10,000 is at ₹2,00,000. For traders with a high risk tolerance, buying at ₹2,17,400 with a stop-loss at ₹2,12,000 and booking profits at ₹2,34,000 could be a viable strategy. However, if the contract breaks below ₹2,14,000, selling with a stop-loss at ₹2,19,000 for a target of ₹2,00,000 may be considered.