Gold price moves in range on Fed tapering concerns; expect bullion rates to trade sideways this week

August 23, 2021 10:51 AM

At MCX, Gold October prices have near term resistance at Rs 47,600 per 10 grams and support at Rs 46,700 per 10 gram.

Gold price is expected to trade sideways to up this week. (Image: REUTERS)

By Tapan Patel

Commodity prices traded mixed with most of the commodities in non-agro segment traded under pressure witnessing selling for the week. Gold prices managed to end in green while silver prices declined following weak global cues. Crude oil and base metals plunged on-demand growth worries over rising COVID cases. 

Gold prices traded in range with spot gold prices at COMEX ended marginal up at $1781 per ounce for the week. Gold October futures at MCX ended 0.46% up at Rs. 47158 per 10 gram along with rupee depreciation. The spot rupee ended around 0.20% weaker against the dollar for the week. Gold ETF holdings continued outflows as holdings at SPDR Gold Shares fell to 1012 tonnes from previous week’s 1022 tonnes for the week. The CFTC data showed that money managers increased their net long positions by 26636 lots in last week.

Silver prices traded lower with spot silver prices at COMEX fell by 3.05% to $23.03 per ounce for the week. MCX Silver September futures fell by 2.40% to Rs. 61721 per KG. Silver prices witnessed sell-off with fall in industrial metals over demand worries. Silver prices continued underperforming gold prices which improved Gold/Silver ratio to 77.33. The CFTC data showed that money managers decreased their net long positions by 2146 lots in last week.

Bullion prices kept volatile trading during the week on mixed global cues with stronger dollar and Fed tapering concerns along with rising delta variant worries. The precious metals have capped upside with Gold prices are struggling to break above $1800 per ounce on Fed jitters over unwinding the stimulus measures. The recent comments from various FED officials to hike interest rates sooner than 2023 has boosted buying in dollar index. The recent FED minutes showed that officials saw the potential to begin asset tapering in 2021 providing that the economic recovery remains within expectations. The traders and investor are eyeing for comments from the Fed’s Jackson Hole symposium, due to take place from Aug. 26 to 28. The dollar index rallied by 1.06% to 93.50 for the week. Bullion prices kept downside limited over rising worries over fast-spreading Delta variant across the globe including major economies like China, US, and Japan.

We expect gold prices to trade sideways to up in coming week with COMEX spot gold resistance at $1810 per ounce and support at $1750 per ounce. At MCX, Gold October prices have near term resistance at Rs 47,600 per 10 grams and support at Rs 46,700 per 10 gram. COMEX silver spot has near term resistance at $23.90 per ounce with support at $21.80 per ounce. MCX Silver September has important resistance at Rs 63,800 per KG and support at Rs 60,500 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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