Gold may trade with bullish bias this week; rising covid-19 cases keeps risk premium high

January 4, 2021 11:38 AM

At MCX, Gold February prices have near term resistance at Rs. 51200 per 10 grams and support at Rs. 49700 per 10 gram.

Prior to the inflows seen in the past two years, the safe-haven asset had witnessed an outflow between 2013 and 2018.Prior to the inflows seen in the past two years, the safe-haven asset had witnessed an outflow between 2013 and 2018.

By Tapan Patel

Commodity prices traded mixed last week with most of the commodities in Non-Agri segment kept narrow trading range on New Year holidays. Bullion prices traded firm on a weaker dollar as the dollar index ended down by 0.43 per cent to below 90 mark for the week.

Gold prices traded higher ended in green for the fifth week in the trot with spot gold prices at COMEX rose by 0.79% to $1898 per ounce. Gold prices ended the year with the gains of 25% reporting the best annual run in a decade. Gold prices at MCX rose by 0.34% to Rs. 50244 per 10 grams as stronger rupee capped upside during the week. The spot rupee appreciated by over half a percent against the dollar during the week. 

Silver prices traded higher with spot silver prices at COMEX rose by more than 2% to $26.40 per ounce for the week. MCX Silver March futures ended around 1% up to Rs. 68120 per KG with recovery in global peers.  

Bullion prices witnessed range-bound trading during the New Year holiday week. The lack of economic data and the holiday-shortened week has kept investors’ interest down over New Year squaring off. Prices have recovered from support levels keeping firm trading range over economic growth concerns on worries over new strain of coronavirus spreading. The weaker dollar also boosted buying in precious metals with stimulus announcements from US. The rising COIVD-19 cases across world and lockdown measures in UK, Europe and some parts of US may keep risk premium high in bullion prices.

We expect bullion prices to trade in current range with a bullish bias for the short term with COMEX spot gold having strong resistance near $1920 per ounce and support at $1860 per ounce. At MCX, Gold February prices have near term resistance at Rs. 51200 per 10 grams and support at Rs. 49700 per 10 gram. COMEX silver spot has near term resistance at $27.50 per ounce with support at $25 per ounce. MCX Silver March has important resistance at Rs. 72000 per KG and support at Rs. 67000 per KG.

(Tapan Patel is a Senior Analyst (Commodities) at HDFC Securities. The views expressed by the author are his own. Please consult your financial advisor before investing.)

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