Gold regains sheen in Dec.

The expectation of a fresh stimulus package in the U.S. played a key role in bolstering sentiment for precious metals.

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)

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