Gold, Silver, and Rupee - US stimulus package to be the key says ICICI Securities

Gold prices traded in a tight range in the last few weeks as investors waited for developments around a US stimulus package and posted a monthly decline as a stronger dollar took some shine off the precious metal. MCX gold prices have an immediate strong support around Rs 47500 level. As long as it sustains above this level ICICI Securities may see a bounce towards Rs 51000 level in the coming weeks as upcoming announcements of the further stimulus measures by the newly elected US government are likely to support gold as perfect hedge against possible inflation.

Silver futures rallied strongly last week as rumours circulated on Reddit urging retail investors to pile into the market & drive up prices. Some mining stocks surged. Trading of iShares Silver Trust rose sharply while some silver traders covered short positions to avoid being caught by rising prices. ICICI Securities expect silver prices to continue their rally from current levels towards Rs 78000 as sustained buying of silver ETFs can bolster silver prices by increasing the number of shares in the fund and making its operator buy more metal to back them.

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Rupee expected to appreciate towards 72.50 level:

ICICI Securities expect the rupee to appreciate from current levels as the broad based weakening trend of the dollar is likely to resume in coming weeks as the US is expected to announce further stimulus measures to revive its economy. US$INR futures have a major hurdle around the Rs 73.80 level. As long as it sustains below this level, we expect the appreciation trend in the rupee to continue towards next strong support placed around Rs 72.50 level in coming weeks.

Overall, ICICI Securities expect the EURINR futures to resume its bullish trend towards 91 level as broad based dollar weakening is expected to provide support to the single currency. EURINR futures have a major support around 88 level. As long as it sustains above this level, ICICI Securities expect the bullish trend to continue towards 91 level. However, a break below 88 level will negate our bullish view.