By Tapan Patel
Commodity prices traded firm with most of the commodities in the Non-Agro segment kept firm trading range for the week. Bullion prices traded higher despite a stronger dollar while base metals traded mixed hovering in the upper trading range. Crude oil prices extended rally on stalled OPEC plus output decision.
Gold prices traded higher with spot gold prices at COMEX rose by 0.33% to $1787 per ounce for the week, gaining for the second straight week. Gold prices at MCX rose by 0.77% at Rs 47,285 per 10 gram supported by sharp rupee depreciation. The spot rupee continued weekly fall losing 0.75% against the dollar for the week. Gold ETF holdings at SPDR Gold Shares remained unchanged at 1043 tonnes for the week. The CFTC data showed that money managers decreased their net long positions by 3647 lots last week.
Silver prices continued outperforming gold with spot silver prices at COMEX rose by 1.42% to $26.47 per ounce for the week. MCX Silver September futures ended up by 1.83% to Rs 69,118 per KG. Silver prices traded higher supported by a rally in base metals on supply concerns and a strong demand outlook for industrial metals.
Bullion prices traded strongly during the week limiting the downside with a fall in US treasury yields and mixed global economic data. The traders and investors were awaiting key US employment data throughout the week to gauge FED stance in the next FOMC meet. The US unemployment rate rose by 5.9% in last month against the forecast of 5.6%. The US 10 year treasury yields fell to 1.43% during the week boosting buying in precious metals despite rally in dollar index. Bullion prices also got support from rising cases of Delta variant of coronavirus in the UK and other parts of the world leading to partial lockdowns. Bullion prices have recovered from recent lows on speculation over FED tapering signals and inflation worries as market players are awaiting clarity from FED officials.
We expect gold prices to trade sideways to up in the coming week with COMEX spot gold resistance at $1800/$1820 per ounce and support at $1750 per ounce. At MCX, Gold August prices have near term resistance at Rs. 47800 per 10 grams and support at Rs. 46500 per 10 gram. COMEX silver spot has near term resistance at $27.20 per ounce with support at $25.60 per ounce. MCX Silver September has important resistance at Rs. 71800 per KG and support at Rs. 67000 per KG.
(Tapan Patel is a Senior Analyst (Commodities) at HDFC Securities. The views expressed are the author’s own. Please consult your financial advisor before investing.)