By Saumil Gandhi

Commodity prices edged lower with most commodities witnessing sharp correction for the week except the energy complex. Bullion prices lost ground and plummeted their fresh swing low as the market braced for more interest rate hikes by the U.S. Federal Reserve in the coming months. Crude oil prices after volatile trade throughout the week settled marginally up by 0.40% despite short-term price pressured by the US excessive inventory build from last few weeks, oil markets still face an undersupply issue due to China’s reopening and upcoming Russia’s output cuts, while Natural gas price rose by 7.84% on the back of short covering rally. Base metals prices tumbled heavily this week as stronger US dollar and sluggish demand. The dollar was on the front foot, supported by a strong run of economic data out of the United States that traders bet will keep the Federal Reserve on its monetary policy tightening path for longer than initially expected.

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Gold price fell to a two-month low with spot gold price at Comex ending lower by 1.70% at $1811 per ounce for the week. Gold April futures at MCX fell by 1.47% to Rs. 55432 per 10 grams. Gold prices throughout the week witnessed selling pressure as following a series of strong US macro data investors have walked back expectations of a rate cut this year and expect U.S. rates to peak in July at 5.35% and remain above 5% until the end of the year. Comex Spot Gold trend has been reversed post strong US Non-farm Payrolls data and has lost about 5.60% since 3rd February, having posted significant declines in the previous two out of three weeks.

Silver price bearish trend extended this week with spot silver at Comex slipping to a 13-week low and closing lower by 4.45% at $20.80 per ounce for the week. MCX Silver March’s future declined by 3.35% to Rs 63433 per kg for the week. 

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We expect bullion prices will correct further from the current level and any pullback in price will use as a selling opportunity. Comex Spot Gold has resistance at $1840/1860 per ounce and support at $1795 per ounce, falling below this level will extend the downside to $1780 levels. MCX Gold April future has resistance at Rs 55980 per 10 grams and support place at Rs 55040/54520 per 10 grams. Comex Spot silver has resistance at $21.40/21.95 per ounce and support at $19.70 per ounce. MCX Silver May’s future price face resistance at Rs 66100 per 1kg and find support at Rs 62600 per 1 kg for the next week.

(Saumil Gandhi, Senior Analyst – Commodities, HDFC Securities. Views expressed are authors own.)