By Tapan Patel
Commodity prices traded lower with most of the commodities in the non-agro segment witnessed sell-off following dollar rally. Bullion prices recorded the worst day on Friday extending the weekly decline post US payroll data. Crude oil prices reported worst weekly decline in nine months while base metals followed weak global cues on-demand growth concerns.
Gold prices ended lower with spot gold prices at COMEX fell by 2.82% to $1763 per ounce for the week reporting the worst week in last two months. Gold October futures at MCX plunged by by 2.52% at Rs 46640 per 10 gram along with rupee appreciation. The spot rupee ended around 0.35% stronger against the dollar for the week. Gold ETF holdings witnessed outflows as holdings at SPDR Gold Shares fell to 1025 tonnes from previous week’s 1031 tonnes for the week. The CFTC data showed that money managers increased their net long positions by 851 lots in last week.
Silver prices declined with spot silver prices at COMEX fell by 4.55% to $24.33 per ounce for the week. MCX Silver September futures loses 4.20% to Rs 65000 per KG. Silver prices traded under pressure on stronger dollar and selling base metals on weaker demand outlook on rising COVID worries. The CFTC data showed that money managers increased their net long positions by 4709 lots in last week.
Bullion prices witnessed sell off in the last trading day on better than expected rise in US Job numbers which fuelled expectations of sooner FED tapering. The US Federal Reserve Vice Chairman earlier said that Fed may look to raise interest rates sooner than 2023. The US July job market report exceeded expectations reflecting opposite of the trend signalled from ADP numbers. The hawkish stance from Fed vice chair has raised market expectations that Fed may soon unveiled some timeline to unwind bond buying programme. The US 10 year treasury yields ended at 1.30% recovering from the lows of 1.12% of the week. The dollar index rallied by 0.68% to 92.80 taking toll on commodities. However, rising worries over the fast-spreading Delta variant may limit the downside in precious metals.
We expect gold prices to trade lower in coming week with COMEX spot gold resistance at $1800 per ounce and support at $1750 per ounce. At MCX, Gold October prices have near term resistance at Rs. 47600 per 10 grams and support at Rs 46000 per 10 gram. COMEX silver spot has near term resistance at $26.30 per ounce with support at $23.50 per ounce. MCX Silver September has important resistance at Rs 68000 per KG and support at Rs 63500 per KG.
(Tapan Patel is a Senior Analyst (Commodities) at HDFC securities. Views expressed are the author’s own. Please consult your financial advisor before investing.)