Commodity prices traded mixed with bullion prices held range bound movement ended in red for the week. Crude oil prices rallied on strong demand outlook on easing worries over omicron virus. Base metals traded mixed with Nickel and aluminium ended in red while rest of the metals traded up on lower supplies over tight inventories. Gold prices traded steady with spot gold prices at COMEX ended flat to $1783 per ounce for the week. Gold February futures at MCX rose by 2.14% at Rs. 48164 per 10 gram supported by rupee depreciation. The spot rupee ended 0.81% lower at 75.78 against the dollar for the week. Gold ETF holdings witnessed outflows as holdings at SPDR Gold Shares fell to 983 tonnes from previous week’s 984 tonnes. The CFTC data showed that money managers decreased their net long positions by 11570 lots in last week.
Silver prices extended decline with spot silver prices at COMEX fell by 1.46% at $22.20 per ounce for the week. MCX Silver March futures ended up by 0.80% to Rs. 61151 per KG for the week. Silver prices underperformed gold on demand worries from China for industrial use. The CFTC data showed that money managers decreased their net long positions by 9718 lots in last week.
Bullion prices traded under pressure during the week on stronger dollar and omicron worries. Gold prices kept steady trading range above $1780 per ounce still ended lower for the fourth week in a row after falling to $1770 per ounce during the week. Bullion prices held steady trading range on mixed global cues over Fed speculation and higher US inflation data. The US November reading for the Consumer Price Index came in on level with October, which was already at 40-year highs.
The Precious metals capped downside witnessing recovery on Friday as market players side-lined the faster rate hike expectations over higher inflation. The traders and investors will await for US FOMC meeting outcome to gauge any hint over interest rate hike. The Fed is keeping a close watch on inflation and employment, among others, to determine the timing for the first post-pandemic rate hike.
We expect gold prices to trade sideways to down in coming week with COMEX spot gold resistance at $1810 per ounce and support at $1750 per ounce. At MCX, Gold February prices have near term resistance at Rs. 48600 per 10 grams and support at Rs. 47500 per 10 gram. COMEX Spot silver has near term resistance at $23.20 per ounce with support at $21 per ounce. MCX Silver March has important resistance at Rs. 63500 per KG and support at Rs. 59800 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.)