– By Saumil Gandhi
Commodity market witnessed mixed performance last week. Gold prices post FOMC event climbed above $2000 per ounce but failed to sustain gain and for the week price settled marginally lower. while silver prices outperform gold and rose by 2.80% last week. In Energy space Crude oil prices closed up by 3.78% last week, first weekly gain after two consecutive weeks declined. Whereas Natural Gas prices extended bearish trend and price closed lower by 5.22% last week as higher supply and weak demand continued to weigh on prices. In Base metals Copper prices surged almost 4.0% on the back of tight supply, improved demand and higher spot premium.
Gold has resumed uptrend post Federal Reserve policy outcome as traders assessed the latest comments from the Federal Reserve as taking a dovish stance. Further fall in dollar index and bond yields boosting appeal of precious metal. The dollar index dropped to seven weeks low after the Federal Reserve raised its policy rate 25 basis points. However, on Friday Gold prices retreated after Federal Reserve Bank of St. Louis President James Bullard said that he raised his forecast for peak interest rates this year amid ongoing economic strength, based on an assumption that banking sector strains will ease. For the week Comex spot gold settled marginally at a loss of 0.55% at $1978 per ounce.
Comex Silver prices posted a second consecutive weekly gain and price rose by 2.80% at $23.22 per ounce. MCX Silver May futures settled higher by 2.80 % to Rs 70411 per kg for the week. Silver ETF investment demand marginally improved, Silver ETFs added 773,833 troy ounces of silver to their holdings in the last trading session.
Looking forward, we expect precious metals to continue to be influenced by various macro forces ranging from Federal Reserve interest rate hike expectations, lingering banking fears (recently banking-sector fears spread to Germany’s Deutsche Bank), dollar weakness, and falling Treasury yields. On the Technical front both gold and silver are in uptrend and the bullish trend will likely expand this week. Comex spot gold has resistances at $2033/$2065 per ounce and supports at $1935/1910 per ounce. MCX Gold June future has resistances at Rs 60700/62300 per 10 grams and supports place at Rs 58600/57500 per 10 grams. Comex Spot silver has resistance at $ 24.80 per ounce and support at $21.70 per ounce. MCX Silver May future price face resistances at Rs 71700/73000 per 1kg and find supports at Rs 69500/68180 per 1 kg for the next week.
(Saumil Gandhi is the Senior Analyst (Commodities) at HDFC