Commodity prices fall as precious metals correct 1%, crude oil sinks by 5%; consolidation phase to continue

All commodities, save natural gas, tumbled in trade last week as experts predict the US Fed will continue in its hawkish stance.

Comex spot gold ended lower by 1.05% at $1983 per ounce last week.

By Saumil Gandhi

Most of commodities’ prices moved towards southward direction in last week except natural gas. Precious metals have corrected more than 1.0% last week amid expectation that the Federal Reserve will continue its aggressive monetary tightening to curb inflation. In energy complex, Crude oil prices tumbled by almost 5.0% as concerns over slowing economic growth after series of weaker than expected US macro data which could likely to hurt crude oil demand. While Natural Gas prices ended up by 5.0% on the back of short covering rally. Base metals price came under pressured following disappointing manufacturing data and as fresh concerns emerged over tensions between the US and China.

Comex spot gold ended lower by 1.05% at $1983 per ounce last week, throughout the last week price traded in choppy range with negative bias. Bullion prices down side triggered by hawkish commentary from Federal Reserve officials and uptick in US dollar and bond yields while weaker US macro data protected heavy fall in precious metals. The US dollar posted first weekly gain in more than a month as bets of another rate hike from the U.S. Federal Reserve in May firm.  In domestic market MCX gold June contract declined by 0.80% and closed at Rs 59845 per 10 grams. Domestic market retail demand of gold jewellery and gold items remained sluggish on the auspicious Akshaya Tritiya day as record high prices of the precious metal dampened the festive demand this year.

Comex Silver prices dropped by 1.04% at $25.08 per ounce, registered first weekly declined after five consecutive weeks gained. MCX Silver July future settled lower by 1.22 % to Rs 75944 per kg for the week. The weakness in silver was unfolding despite very favorable Silver Institute deficit predictions earlier this week, signaling the silver market is focused on spillover fear from big-picture macroeconomic selling of physical commodities. It should also be noted that in the prior 3 days, silver ETF holdings have seen large outflows above 5 million ounces, suggesting investors might have banked profits on the recent rally.

Looking forward, we expect consolidation phase will continue in bullion with negative bias. Comex spot gold having immediate support at $1965 per ounce if price breaks this support it will likely to fall towards $1950/$1935 per ounce. For this week Comex spot gold having resistances at $2005/$2033 per ounce and supports at $1950/1935 per ounce. MCX Gold June future has resistances at Rs 60700/61400 per 10 grams and supports place at Rs 59100/58600 per 10 grams. Comex Spot silver having resistance at $ 26.25 per ounce and support at $22.70 per ounce. MCX Silver July future price face resistances at Rs 76900/77505 per 1kg and find supports at Rs 75270/73960 per 1 kg.

(Saumil Gandhi, Senior Analyst (Commodities), HDFC Securities. Views expressed are author’s own. Please consult your financial advisor before investing.)

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First published on: 24-04-2023 at 09:36 IST