On a weak wicket

Precious metals continued to lose their sheen in June and closed on a weak note for the third month

Precious metals continued to lose their sheen in June and closed on a weak note for the third month in succession. Similar to the recent months, the strengthening of the U.S. dollar and the rise in U.S. treasury yield affected the sentiment towards precious metals.

As a result, Comex gold fell 2.2% in June to close at $1,807.3 an ounce. Comex silver saw a much steeper cut of 6.2% to settle at $20.35 an ounce.

In the domestic market, MCX gold futures fared relatively better with a moderate cut of 0.65% to close at ₹50,517 per 10-gm. MCX silver futures dropped 4.8% to settle at ₹58,887 per kg, at the end of June.

The weakening of the rupee against the U.S. dollar helped mitigate the impact of fall in gold in the domestic market. The hike in import duty on gold and silver announced on July 1, would also influence the domestic prices.

As anticipated last month, the Comex gold price ruled weak in June and also reached the then-mentioned target of $1,770-1,780. The short-term outlook is positive and a move to $1,850-1,860 appears likely. This outlook would be invalidated if the price falls below $1,780.

Though Comex gold could see some recovery in the near term, the overall trend remains weak, and the expectation is that the price would resume its downtrend on the completion of the short-term rise.

The price action in Comex silver was also in line with expectations. As observed last month, the price ruled weak and also dropped well below the target zone of $20.20 - 20.40. The recent fall has pushed the price to the oversold region and a short-term bounce is likely. A move above $20.1 would confirm short-term strength and the price could then rise to $20.85-21.