Gold, silver consolidate

Price action in precious metals was rangebound in May. After initial weakness in first half of the month, precious metal prices staged recovery in the latter half. News flow pertaining to trade talks and tariff postponement by the U.S. on European Union and China played a key role in influencing sentiment towards precious metals.

As a result, Comex gold closed almost unchanged at $3,315.4 at May end, a 0.1% fall. Performance of Comex silver was no different. Silver prices edged up marginally by 0.6% to settle at $33.03 at the end of May.

Mirroring the trend in global markets, MCX Gold price posted a nominal 0.5% gain to settle at ₹95,875 per 10-gram at the end of May. MCX silver posted tad better performance, recording a 1.1% gain to settle at ₹97,015 per kilogram.

Volatile price action

As anticipated last month, the price of Comex gold ruled weak and also dropped to the then-mentioned target zone of $3,140-$3,150. After dropping to a low of $3,123 on May 15, gold price staged a recovery thereafter. Comex gold price is likely to stay rangebound in the $3,120-$3,450 zone. Only a breakout from this zone would impart momentum to the price action. Until then, expect volatile price action within the $3,120-$3,450 zone.

The Comex silver price slid to a low of $31.78 on May 15 and recovered. The recent rangebound price action witnessed in Comex silver may persist in the short-term. Only a breakout from the current range of $30.5-$34.5 would set the tone for the next directional move in silver. Expect the price to oscillate viciously within the range, until the range breakout.

As anticipated, the MCX gold price stayed weak last month, but the price did not drop to the target zone mentioned earlier. After easing to a low of ₹90,890, the price recovered in the past couple of weeks. The MCX gold price is likely to be confined to the ₹95,000-₹97,000 range. A breakout from this range could trigger the next big move in gold. Until then, a range bound environment is likely.

MCX silver price too is likely to sustain within the present price range of ₹96,500-₹98,500 zone. Only a move beyond this range would trigger momentum to the price action. Until the breakout happens, silver price is likely to move around within the boundaries of the above range.

To conclude, precious metal prices are in a consolidation phase and next trending move will happen only if price breaks out from the range.

(The author is a Chennai based analyst/trader. The views and opinion featured in this column is based on the analysis of short-term price movement in gold and silver futures at COMEX & Multi Commodity Exchange of India. This is not meant to be a trading or investment advice.)