Precious metals posted gains last week whereas crude oil prices saw a decline. In terms of dollars, gold ($2,801/ounce) and silver ($31.3/ounce) were up 1.1 per cent and 2.3 per cent respectively. The Brent crude oil futures on the Intercontinental Exchange (ICE) ($75.70/barrel) depreciated 2.4 per cent.

In the domestic market, because of the Budget announcement, there was an additional trading session (only morning session) on Saturday. For the week, gold futures (₹82,350/10 gm) was up 2.1 per cent whereas silver futures (₹93,250/kg) gained 1.8 per cent. The crude oil futures (₹6,359/barrel) lost 1.1 per cent.

Below is an analysis of futures contracts in the domestic market.

MCX-Gold (₹82,350)

Gold futures (April) broke out of a resistance at ₹81,000 and reached a record high of ₹83,360. But it then retraced to end the week at ₹82,350.

While the bull trend is intact, there is a possibility of a minor price correction, possibly to ₹81,000 or to ₹80,500. A trendline support and 20-day moving average coincide at ₹80,500 making it a strong support. Hence, a decline below this is less likely.

A rally, either from the current level or after a drop to ₹80,500-81,000 region, can lift gold futures to ₹85,000 in the near term. Resistance above ₹85,000 is at ₹88,000.

Spot gold: The positive outlook in domestic gold futures is substantiated by the movement in the international price of gold. The spot gold hit a record high of $2,817.6 before moderating to the current level of $2,801. The chart shows that the price can rise further, potentially to $2,920.

Trade strategy: Stay out for now. Go long if MCX gold futures soften to ₹81,000. Target and stop-loss can be ₹85,000 and ₹80,300 respectively.

But traders who can take higher risks can buy now at ₹82,350 and add longs at ₹81,000. Target and stop-loss can be the same as the above.

Silver futures (March) posted a gain last week. Yet, it could not break out of the resistance at ₹93,600 and so it remains within the ₹90,000-93,600 range, which has been the case since the second week of January this year.

Given the prevailing chart set-up, the probability of a breakout of ₹93,600 is high. Nevertheless, before that, the contract might moderate to ₹91,500.

An eventual breach of ₹93,600 can lift the contract to ₹96,500, a barrier. Above this, ₹1,02,500 is a notable resistance.

But note that a break below ₹90,000 can change the short-term outlook bearish.

Spot silver: The price of silver in dollar terms has crossed over a crucial hurdle at $31. The price action shows that the spot price of silver can touch $32.50 soon. A breach of this can take it further to $35. Such an upswing can trigger a rally in MCX silver futures.

Trade strategy: Exit the longs (recommended at ₹91,000) at the current level of ₹93,250. Consider buying silver futures again if the price dips to ₹91,500. Target and stop-loss can be ₹96,500 and ₹89,500 respectively.

MCX-Crude oil (₹6,359)

The February crude oil futures lost 1.1 per cent last week. But the intra-week price movement shows that the contract was largely charting a sideways trend through the week. It has been held in the narrow price band of ₹6,275-6,425.

This consolidation means that the downtrend, which began a couple of weeks back, has lost some momentum. The lower boundary of the range at ₹6,275 can offer support for crude oil futures. A rising trendline coincides with this level, making the base stronger.

A rally from the current level can take crude oil futures back to the resistance at ₹6,850. Following this, potential resistance levels are at ₹7,000 and ₹7,200.

On the other hand, if the contract extends the decline and slips below ₹6,275, we might see the price declining to ₹6,000 and then possibly to ₹5,750. That said, the contract is now hovering near a support and so there is a chance of a recovery. A rise above ₹6,425 can be an indication that the upswing has resumed.

Brent futures: The contract, after a decline, is currently hovering in the support band of $75-76. Until this hold, the upward bias will remain, possibly leading to a fresh rally. Consequently, the MCX crude oil futures can go up as well.

Trade strategy: As there is a support nearby for MCX crude oil futures, the risk-reward ratio is favourable for long positions. Therefore, we suggest buying at ₹6,350 with a stop-loss at ₹6,170. When the contract touches ₹6,600, revise the stop-loss to ₹6,420. Book profits at ₹6,850.

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