Bullion Cues: Bears hold sway

Last week saw precious metals, particularly gold and silver, under pressure due to a strengthening dollar. The dollar index reached a 19-month high of 103.44 before settling slightly lower at 103.41. Gold prices fell by 4.6 percent to $3,884.70 per ounce, while silver dropped 5.8 percent to $48.70 per ounce. Both metals have crucial support levels ahead, but the dollar's ascent suggests a potential short-term recovery in precious metals, though prices may continue to fall before rebounding.

In the domestic market, gold futures (₹1,36,705/10 gram) fell 3.8 percent, while silver futures (₹1,76,309/kg) declined 4.6 percent. Gold (Dec) futures broke below the support level of ₹1,38,000 and hit a fresh low of ₹1,35,530 before marginally recovering to close at ₹1,36,705. The downtrend is evident, with no signs of an imminent reversal.

Gold futures in the domestic market are expected to keep declining, possibly reaching ₹1,35,000 or even ₹1,33,500. For silver (Dec) futures, a rebound from the resistance level of ₹1,90,000 last week is unlikely, as the contract has underperformed gold. However, if it manages to stay above the previous low of ₹1,75,251, silver futures could face considerable selling pressure at the resistance levels of ₹1,41,000 and ₹1,43,600.

Only a decisive break above ₹1,43,600 could turn the outlook positive. Silver futures need to surpass ₹2,00,000 for the outlook to become bullish, as the bears currently dominate the market.