By Tapan Patel

Commodity prices traded lower with most of the commodities in the non-agro segment witnessing decline for the week except crude oil. Bullion prices traded down on stronger dollar and rise in US bond yields. Crude oil prices rallied more than 2% for the week on tight supplies and higher demand amid geopolitical risk. Base metals ended down on China demand worries following strict lockdown and mass testing. The dollar index ended 1.72% up at 102.96 for the week. 

Gold prices traded lower with spot gold prices at COMEX ended 1.79% down at $1897 per ounce for the week. Gold June futures at MCX fell by 0.97% to Rs. 51754 per 10 gram along with rupee appreciation. The spot rupee ended marginally up by 0.07% at 76.43 against the dollar for the week. Gold ETF holdings witnessed inflows as holdings at SPDR Gold Shares fell to 1094 tonnes from previous week’s 1104 tonnes. The CFTC data showed that money managers have decreased their net long positions by 25524 lots in last week.

Silver prices witnessed heavy selling with spot silver prices at COMEX plunged by 5.66% to $22.78 per ounce for the week. MCX Silver May futures fell by 4.49% to Rs. 63556 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 14748 lots in the last week. 

Bullion prices reported the second monthly loss in 2022, with COMEX spot gold losing nearly 2% for the month April 2022. The precious metals traded down for the week on a stronger dollar ahead of the US FOMC meeting and expectations of larger rate hike. The dollar index rose by 4.60% in April, its most since January 2015. The traders and investors are awaiting for next week’s US FOMC meeting after Fed Chair Jerome Powell hinted at two or more 50 bps rate hikes to tame inflation. The FOMC members are considering as many as seven rate hikes this year and expect monetary tightening to continue into 2023 if inflation does not drop to desired levels. The geopolitical risk over Russia-Ukraine conflict, higher oil prices and China COVID worries are the supporting factors which may limit downside in precious metals prices.

We expect gold prices to trade sideways to down this week with COMEX spot gold resistance at $1940 per ounce and support at $1870 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 $24 per ounce with support at $21.40 per ounce. MCX Silver July has important resistance at Rs. 66500 per KG and support at Rs. 60800 per KG.

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