Bullion prices may keep their current trading range ahead of the US FOMC meeting this month, the rally in crude oil prices may keep inflation hedge demand up for precious metals, limiting downside
By Tapan Patel
Commodity prices traded mixed with most of the commodities in the non-agro segment kept positive trading throughout the week while very few managed to end in green. Bullion prices pared gains on positive US data and stronger dollar ahead of the US FOMC meet this month. Base metals kept a firm trading range on China re-opening and demand growth prospects. Crude oil prices rallied to $120 per barrel on tight supplies with EU sanctions on Russia despite OPEC plus hiking output quota.
Gold prices traded steady with spot gold prices at COMEX ended marginal down near $1851 per ounce for the week. Gold August futures at MCX fell by 0.12% to Rs. 50984 per 10 gram despite rupee depreciation. The spot rupee fell by 0.03% at 77.61 against the dollar for the week. Gold ETF holdings witnessed outflows as holdings at SPDR Gold shares declined to 1066 tonnes from previous week’s 1070 tonnes. The CFTC data showed that net speculative positions have decreased by 11200 lots in the last week.
Silver prices ended in red with spot silver prices at COMEX fell by 0.77% to $21.92 per ounce for the week. MCX Silver July futures declined by 0.73% to Rs. 61660 per KG for the week. Silver prices pared weekly gains on Friday following stronger dollar and fall in industrial metals. The CFTC data showed that net speculative positions have decreased by 100 lots in the last week.
Bullion prices kept firm trading range throughout the week with COMEX gold hitting highs near $1870 per ounce on weaker dollar and inflation worries. The economic growth worries also boosted some safe haven buying in precious metals for the week. However, Friday’s US Non-farm patrol halted the forward march of the precious metals. The Employers added 390,000 jobs while the jobless rate remained steady at 3.6% for a third month in a row. The positive US data pressured bullion prices on risk on sentiment with a rally in dollar index. The dollar index ended 0.46% up at 102.14 while US 10 year treasury yields were at 2.94% for the week. Bullion prices may keep their current trading range ahead of the US FOMC meeting this month, the rally in crude oil prices may keep inflation hedge demand up for precious metals, limiting downside.
We expect gold prices to trade sideways to up this week with COMEX spot gold resistance at $1870 per ounce and support at $1810 per ounce. At MCX, Gold August prices have near term resistance at Rs. 51500 per 10 grams and support at Rs. 50300 per 10 gram. COMEX Spot silver has near term resistance at $22.70 per ounce with support at $21.40 per ounce. MCX Silver July has important resistance at Rs. 63800 per KG and support at Rs. 59800 per KG.
(Tapan Patel, Senior Analyst (Commodities), HDFC Securities. Views expressed are the author’s own.)