Gold price continues to soar, helped by weaker dollar; expect rates to move sideways to up this week

September 06, 2021 9:40 AM

Bullion prices rallied with Gold traded near two-month highs for the fourth consecutive week.

Stock marketGold October futures at MCX ended marginal down at Rs 47524 per 10 gram limiting upside on sharp rupee appreciation. (Image: REUTERS)

By Tapan Patel

Commodity prices traded higher with most of the commodities in non-agro segment gained during the week supported by a weaker dollar. Bullion prices traded higher in last trading day over weak US job market report. Base metals gained on higher demand outlook and strong equity indices. Crude oil prices extended weekly gains on slower than expected output recovery over power outages from Hurricane Ida. 

Gold prices traded higher with spot gold prices at COMEX ended over half a percent up at $1827.73 per ounce for the week. Gold October futures at MCX ended marginal down at Rs 47524 per 10 gram limiting upside on sharp rupee appreciation. The spot rupee rallied by 0.91% against the dollar for the week. Gold ETF holdings continued to decline as holdings at SPDR Gold Shares fell below 1000 tonnes to 998.52 tonnes from the previous week’s 1002 tonnes for the week. The CFTC data showed that money managers increased their net long positions by 4273 lots in last week.

Silver prices traded higher with spot silver prices at COMEX rallied by 2.87% to $24.72 per ounce for the week. MCX Silver September futures ended over half a percent down to Rs 63226 per KG over strong rally in rupee. Silver prices outperformed Gold for the second week supported by bargain buying and gain in industrial metals. The CFTC data showed that money managers increased their net long positions by 2249 lots in last week.

Bullion prices rallied with Gold traded near two-month highs for the fourth consecutive week. The precious metals prices kept firm trading range throughout the week as market players were awaiting for key US job market data. The disappointed data from China and weaker dollar continued to support gold prices for the week. The U.S. Labor Department reported on Friday that employers added 235,000 jobs in August, less than a third of the forecast 733,000. The dollar index fell by 0.70% to 92.04 for the week boosting buying in precious metals. Bullion prices may trade higher on dovish Fed stance with pandemic worries and slower economic growth. 

We expect gold prices to trade sideways to up in coming week with COMEX spot gold resistance at $1850 per ounce and support at $1800 per ounce. At MCX, Gold October prices have near term resistance at Rs 47900 per 10 grams and support at Rs 46900 per 10 gram. COMEX silver spot has near term resistance at $25.80 per ounce with support at $23.60 per ounce. MCX Silver December has important resistance at Rs 65800 per KG and support at Rs 61200 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.)

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