By Tapan Patel

Commodity prices traded mixed with most of the commodities in the non-agro segment ended higher for the week. Crude oil prices rallied more than 8% on lower supplies while base metals traded mixed on firm demand and China virus worries. Bullion prices continued to soar on geopolitical risk and inflation worries capping gains on stronger dollar and rise in bond yields. 

Gold prices traded higher with spot gold prices at COMEX ended 1.91% up at $1958 per ounce for the week. Gold April futures at MCX rose by 0.83% to Rs. 51876 per 10 gram along with rupee depreciation. The spot rupee fell by 0.11% at 76.21 against the dollar for the week. Gold ETF holdings witnessed inflows as holdings at SPDR Gold Shares rose to 1083 tonnes from the previous week’s 1081 tonnes with increased investment into a safe-haven asset. The CFTC data showed that money managers have decreased their net long positions by 13509 lots in last week.

Silver prices rallied with spot silver prices at COMEX rose by 2.25% to $25.53 per ounce for the week. MCX Silver March futures gained by 1.41% to Rs. 68836 per KG for the week. Silver prices have remained strong on higher demand outlook for industrial metals over lower supply worries along with safe-haven buying. The CFTC data showed that money managers have decreased their net long positions by 4225 lots in last week. 

Bullion prices continued upside keeping the firm trading range on geopolitical risk over Russia-Ukraine conflicts and higher inflation worries. The precious metals were up on safe-haven demand over market uncertainty despite of hawkish FED stance. The stalled talks between Russia and Ukraine has also pushed risk premium up. Bullion prices have capped upside with rise in US bond yields and stronger dollar. The US 10 year treasury yields spiked to 2.50% at multi-year highs while dollar index ended 0.57% up at 98.79 for the week. The US FED has indicated more aggressive hikes of 50 basis points in the future to contain inflation at 40-year highs. Bullion prices are expected to trade with positive bias for the coming week eyeing US Non-farm payroll data on Friday.

We expect gold prices to trade sideways to up in the coming week with COMEX spot gold resistance at $1970 per ounce and support at $1910 per ounce. At MCX, Gold June prices have near term resistance at Rs. 53200 per 10 grams and support at Rs. 51400 per 10 gram. COMEX Spot silver has near term resistance at $26 per ounce with support at $24.50 per ounce. MCX Silver May has important resistance at Rs. 70200 per KG and support at Rs. 67000 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.)