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By Tapan Patel
Commodity prices traded higher during the week passed by with most of the commodities in Non-agro segment witnessing strong buying on a weaker dollar. Bullion prices gained amid inflation hedge while base metals rallied on lower supply and higher demand outlook. Crude oil prices traded up with rising hopes for fuel demand recovery.
Gold prices traded higher with spot gold prices at COMEX rose by 1.87% to $1776.51 per ounce for the week. Gold prices at MCX rose by 1.63% to Rs. 47353 per 10 gram while stronger rupee kept upside limited. The spot rupee ended 0.52% higher against the dollar for the week. Gold ETF holdings continued outflow as holdings at SPDR Gold Shares fell to 1020 tonnes during the week down from the previous week’s 1033 tonnes. The CFTC data showed that money managers decreased their net long positions by 12,640 lots in last week.
Silver prices traded higher with spot silver prices at COMEX ended 2.78% up to $25.97 per ounce for the week. MCX Silver May futures rose by 2.54% to Rs 68,684 per KG. The CFTC data showed that money managers increased their net long positions by 4001 lots in last week. Silver prices outperformed gold amid sharp buying in industrial metals.
Bullion prices witnessed strong rally with gold prices reporting the best week in the last four months as traders and investors bet against higher inflation worries. The precious metals got boost from dollar decline and fall in US bond yields over FED comments. The US FED reiterated to keep ultra-low interest rates in recent meetings. The dollar index fell below 92 mark losing 0.66% while US 10 year treasury yields retreated to 1.58% from the 14 month high of 1.77% of the week. Bullion prices traded higher on rising geopolitical tensions after US imposed sanctions on Russia. The rising virus cases in Europe and partial lockdown measures in India and Brazil also supported precious metals to trade higher during the week.
We expect gold prices to trade sideways to up in the coming week as prices are witnessing strong resistance near $1785. The break above $1785 may lead prices towards $1820 with support at $1740 per ounce. At MCX, Gold June prices have near term resistance at Rs 48,000 per 10 grams and support at Rs 46,800 per 10 gram. COMEX silver spot has near term resistance at $26.80 per ounce with support at $24.60 per ounce. MCX Silver May has important resistance at Rs 71,500 per KG and support at Rs 66,500 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.)