–By Tapan Patel
Commodity prices traded higher with most of the commodities in Non-Agro segment witnessed buying during the week despite of stronger dollar. Bullion prices rallied on inflation hedge and Russia-Ukraine tensions. Crude oil prices traded higher on tighter supply and higher demand. Base metals ended in green on strong demand recovery and lower supply fears.
Gold prices traded higher with spot gold prices at COMEX rose by 2.79% to $1859 per ounce for the week. Gold April futures at MCX ended 2.53% up at Rs. 49114 per 10 gram along with rupee depreciation. The spot rupee fell by 0.91% at 75.38 against the dollar for the week. Gold ETF holdings witnessed inflows as holdings at SPDR Gold Shares rose to 1019 tonnes from previous week’s 1012 tonnes as investors rushed to hedge against higher US inflation. The CFTC data showed that money managers have increased their net long positions by 22341 lots in last week.
Silver prices rallied with spot silver prices at COMEX surged by 4.74% to $23.59 per ounce for the week. MCX Silver March futures ended 3.53% higher to Rs. 62988 per KG for the week. Silver prices outperformed gold this week with strong demand outlook for industrial metals. The CFTC data showed that money managers have decreased their net long positions by 1434 lots in last week.
Bullion prices extended gains on Monday with spot COMEX gold prices traded near three month highs on heightened tension on Russia-Ukraine stand-off. The geopolitical risk spurred buying in precious metals despite of imminent rate hike expectations from US FED. Bullion prices traded higher on inflation hedge after US consumer prices jumped 7.5% last month from a year earlier, the steepest year-over-year increase since February 1982. The geopolitical risk over Russia-Ukraine tension boosted buying after US warned that Russia could invade Ukraine at any time in coming week. The dollar index rose by 0.63% to 96.08 mark in last week while the yield on the 10-year US Treasury note fell 7.7 basis points to 1.951%. The U.S. Federal Reserve will release the minutes from its last meeting later in the week which may keep volatility high in bullion prices.
We expect gold prices to trade sideways to up in this week with COMEX spot gold resistance at $1890 per ounce and support at $1830 per ounce. At MCX, Gold April prices have near term resistance at Rs. 50200 per 10 grams and support at Rs. 48900 per 10 gram. COMEX Spot silver has near term resistance at $24.50 per ounce with support at $22.90 per ounce. MCX Silver March has important resistance at Rs. 65600 per KG and support at Rs. 61500 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.)