After losing sheen in November, precious metals regained their lustre in December. Comex gold has wrapped up 2020 in style, with the yellow metal gaining about 24% for the year. This marks the best performance of Comex gold in a decade. The expectation of a fresh stimulus package in the U.S. played a key role in bolstering sentiment for precious metals. The weakness in the U.S. dollar also helped.
Comex gold closed 6.4% higher in December at $1,895.1 an ounce. Comex silver gained 17.2% to settle at $26.4 an ounce at the end of December.
In the domestic market, MCX gold futures gained 4.7% to close at ₹50,151 per 10 gm. MCX silver futures closed 13.1% higher to settle at ₹68,051 per kg at the end of December. As observed earlier, Comex gold ruled firm and achieved the target of $1,865-1,870 mentioned last month. The short-term outlook for gold remains positive and a breakout past $1,965 would help Comex gold reach the next target of $2,025-2,040.
The positive outlook would be under threat if the price falls below $1,760. With a close below this level, the price could then slide to $1,650-1,670.
The gain in Comex silver was more pronounced in December. Silver price hit the earlier mentioned target of $25.6-25.9. The short-term outlook for Comex silver remains positive and a rise to $29.5-30 appears likely. A move above $28.2 would confirm the positive outlook. Below $22, the trend would turn negative and Comex silver could then slide to $19-19.5.
Mirroring the global trend, MCX gold too ruled strong in December and sailed past the target of ₹49,500-50,900 mentioned earlier. The short-term trend is positive, and the price could rise to ₹53,000-53,500. A move past ₹51,700 would confirm the positive outlook. A fall below ₹47,500 would invalidate the positive outlook. A breach of ₹47,500 could push MCX gold to ₹45,250-45,000.
MCX silver too ruled firm in December and also moved past the then mentioned target of ₹66,300-67,000. The short-term outlook is positive and a rise to ₹75,000-75,500 appears likely. A move past ₹71,700 would strengthen this positive outlook. A fall below ₹58,500 would be a sign of weakness and could push MCX silver to lower levels of ₹52,000-52,500.
(The writer is a Chennai-based analyst and trader)