Gold, silver prices recover from lows; investors rushing to safe-havens despite rising bond yields

By Tapan Patel

Commodity prices traded mixed during the week passed by with Bullion prices witnessed recovery from the recent lows. Crude oil prices ended down from reversing from the resistance levels while base metals traded with lower range on China policy tightening fears.

Gold prices traded higher with spot gold prices at COMEX rose by 1.56% to $1727 per ounce for the week. Gold prices at MCX ended marginal up at Rs 44,750 per 10 grams as stronger rupee capped upside. The spot rupee was up by 0.33% against the dollar for the week. Gold ETF holdings continued outflow as holdings at SPDR Gold Shares fell to 1052 tonnes during the week. The CFTC data showed that money managers decreased net long positions by 15960 lots in the last week. 

Silver prices traded higher with spot silver prices at COMEX rallied by 2.66% to $25.92 per ounce for the week. MCX Silver May futures rose by 3.63% to Rs 66,844 per KG. The CFTC data showed that money managers decreased net long positions by 3829 lots in the last week. 

Bullion prices witnessed recovery despite of higher US bond yields. The traders and investors rush to safe-haven buying after US President Joe Biden’s $1.9 Trillion stimulus got final approval. The stimulus package aims to vaccinate the country’s entire adult population before Independence Day on the 4th of July. The higher inflation concerns pressured dollar index to pare weekly gains. The dollar index ended down by 0.32% at 91.68 mark for the week. The US 10 year treasury yields continued to hover near 13-month highs to 1.64% during the week limiting upside in the precious metals. 

We expect bullion prices to trade sideways to up in the coming week as gold prices have respected key support at $1690 witnessing a strong rebound. COMEX spot gold has important resistance near $1740/1760 per ounce and support at $1690 per ounce. At MCX, Gold April prices have near term resistance at Rs 45,200/45,600 per 10 grams and support at Rs 44,100 per 10 gram. COMEX silver spot has near term resistance at $26.80 per ounce with support at $24.90 per ounce. MCX Silver May has important resistance at Rs 69,000 per KG and support at Rs 64,500 per KG.

(Tapan Patel is a Senior Analyst (Commodities) at HDFC securities. The views expressed by the author are his own. Please consult your financial advisor before investing.)