By Tapan Patel

Commodity prices traded weak with most of the commodities in the non-agro segment witnessed decline for the week. Bullion prices traded down on strong US bond yields and positive US data. Crude oil prices plunged by nearly 13% on eased supply worries with progress over peace talks and US APR release. Base metals traded mixed on China demand worries and higher Europe energy costs. 

Gold prices traded lower with spot gold prices at COMEX ended 1.67% down at $1926 per ounce for the week. Gold April futures at MCX fell by 1.49% to Rs. 51606 per 10 gram along with rupee appreciation. The spot rupee rose by 0.56% at 75.78 against the dollar for the week. Gold ETF holdings witnessed inflows as holdings at SPDR Gold Shares rose to 1092 tonnes from previous week’s 1083 tonnes with increased market uncertainty. The CFTC data showed that money managers have decreased their net long positions by 3866 lots in last week.

Silver prices witnessed heavy selling with spot silver prices at COMEX plunged by 3.51% to $24.63 per ounce for the week. MCX Silver May futures fell by 3.06% to Rs. 66733 per KG for the week. Silver prices declined with weaker demand for industrial metals amid rising COVID cases in China. The CFTC data showed that money managers have decreased their net long positions by 1813 lots in the last week. 

Bullion prices ended lower starting the month on a negative note on rising market expectations that US FED will fasten the pace of rate hikes. The fall in US unemployment rate boosted buying in dollar and riskier assets along with a surge in US bond yields. The US unemployment rate improved to 3.6% in March from 3.8% in February despite jobs growth for the month coming in less than market expected at 431,000. Gold has reported best quarterly gains since 2020, ending 5.90% up at March 2022 closing on geopolitical risk and inflation worries. The US FED has indicated more aggressive hikes of 50 basis points, a maximum seven times this year and continued its monetary tightening into 2023 to contain inflation. Bullion prices are expected to trade with positive bias within current range on mixed global cues over Russia-Ukraine conflicts and hawkish FED. 

We expect gold prices to trade sideways to up this week with COMEX spot gold resistance at $1960 per ounce and support at $1890 per ounce. At MCX, Gold June prices have near term resistance at Rs. 52300 per 10 grams and support at Rs. 50800 per 10 gram. COMEX Spot silver has near term resistance at $25.60 per ounce with support at $23.90 per ounce. MCX Silver May has important resistance at Rs. 68600 per KG and support at Rs. 65200 per KG.

(Tapan Patel, Senior Analyst (Commodities), HDFC Securities. Views expressed are the author’s own.)