We expect gold prices to trade sideways to down in coming week with COMEX spot gold resistance at $1800 per ounce and support at $1720 per ounce.
By Tapan Patel
Commodity prices traded lower with most of the commodities in non-agro segment witnessed selling except Crude oil. Bullion prices traded lower on a stronger dollar and FED tapering expectations. Base metals traded down on weak China cues amid real estate crisis and lower demand. Crude oil prices extended weekly gains on higher demand outlook and lower supply from Gulf of Mexico.
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Gold prices traded lower with spot gold prices at COMEX fell by 1.86% to $1754 per ounce for the week. Gold October futures at MCX fell by 1.75% at Rs 45,986 per 10 gram in line with global gold prices with flat rupee. The spot rupee ended 2 paisa up against the dollar for the week. Gold ETF holdings witnessed inflows as holdings at SPDR Gold Shares rose to 1002 tonnes from previous week’s 998 tonnes. The CFTC data showed that money managers increased their net long positions by 3855 lots in last week.
Silver prices witnessed heavy sell off with spot silver prices at COMEX plunged by 5.72% to $22.39 per ounce for the week. MCX Silver September futures fell by 5.66% to Rs 59,992 per KG for the week. The selling in industrial metals over China real estate crisis added pressure to the silver prices extending the downfall. The CFTC data showed that money managers decreased their net long positions by 3834 lots in last week.
Bullion prices traded lower for the second consecutive week on dollar sure and rally in US bond yields. The precious metals traded under pressure following strong US economic data which raised market speculation that US FED may end bond-buying program sooner than expected. The better than expected retail sales data pushed dollar index and US treasury yields up which dampened demand for safe haven assets. The dollar index rose by 0.66% to 93.20 for the week while US 10 year treasury yields rose to 1.37% during the week taking toll on bullion prices. The traders and investors are eyeing for upcoming US FOMC meet due next week to get clues on Fed tapering. Bullion prices may cap downside with short recovery if US FED keep mum on taming the asset purchase program.
We expect gold prices to trade sideways to down in coming week with COMEX spot gold resistance at $1800 per ounce and support at $1720 per ounce. At MCX, Gold October prices have near term resistance at Rs 46,800 per 10 grams and support at Rs 45,600 per 10 gram. COMEX silver spot has near term resistance at $23.60 per ounce with support at $21.50 per ounce. MCX Silver December has important resistance at Rs 62,500 per KG and support at Rs 58,000 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.)