By Tapan Patel
Commodity prices traded higher with most of the commodities in the non-agro segment witnessing buying supported by a weaker dollar. Bullion prices traded up on inflation worries and geopolitical risk despite positive US data. Base metals traded up on lower supply fears over high energy costs with higher demand. Crude oil prices extended gains crossing the $90 mark on tight supply and higher demand following the US winter storm.
Gold prices traded higher with spot gold prices at COMEX rose by 0.93% to $1808 per ounce for the week. Gold April futures at MCX ended 0.76% up at Rs. 47948 per 10 gram as rupee appreciation capped upside. The spot rupee rose by 0.46% at 74.70 against the dollar for the week. Gold ETF holdings witnessed outflows as holdings at SPDR Gold Shares fell to 1012 tonnes from previous week’s 1014 tonnes. The CFTC data showed that money managers have decreased their net long positions by 55160 lots in the last week.
Silver prices ended up with spot silver prices at COMEX rose by 0.20% to $22.52 per ounce for the week. MCX Silver March futures still ended 0.30% lower to Rs. 60849 per KG for the week. The CFTC data showed that money managers have decreased their net long positions by 15867 lots in the last week.
Bullion prices witnessed a volatile week on mixed global cues. Gold prices managed to end in green after falling to $1785 levels witnessing string recovery from support levels. Spot Gold prices at COMEX managed to reclaim $1800 territory despite positive US employment numbers and rate hike expectations from central banks. US employers added 467,000 jobs in January, beating economists’ expectations, although the jobless rate moved up fractionally to 4% from a previous 3.9%. The US inflation is still at 40 years highs while real bond yields are still negative which has supported precious metals prices to trade firm.
The dollar index fell by 1.84% to 95.49 mark boosting buying in commodities. Gold prices have stuck in the range of $1780-$1850 per ounce after the US FED signalled rate hike in 2022. The rising energy costs and geopolitical tensions in Russia – Ukraine standoff may keep risk premium high for the short term.
We expect gold prices to trade sideways to up in the coming week with COMEX spot gold resistance at $1830 per ounce and support at $1780 per ounce. At MCX, Gold April prices have near term resistance at Rs. 48500 per 10 grams and support at Rs. 47400 per 10 gram. COMEX Spot silver has near term resistance at $23.60 per ounce with support at $21.40 per ounce. MCX Silver March has important resistance at Rs. 63800 per KG and support at Rs. 59200 per KG.
(Tapan Patel, Senior Analyst (Commodities), HDFC Securities. Views expressed are the author’s own.)
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