Bullion prices witnessed a decline with Gold prices reported first weekly loss in last five weeks on US FED jitters of asset tapering.
By Tapan Patel
Commodity prices traded mixed with most of the commodities in non-agro segment extended gains for the week except bullion. Bullion prices traded lower on stronger dollar and FED tapering expectations. Base metals gained on strong demand outlook with unchanged ECB policy and supply concerns. Crude oil prices extended weekly gains on slower than expected output recovery while the region is facing another hurricane threat.
Gold prices traded lower with spot gold prices at COMEX declined by more than 2% to $1787.58 per ounce for the week. Gold October futures at MCX fell by 1.51% at Rs. 46806 per 10 gram limiting downside on rupee depreciation. The spot rupee fell by 0.66% against the dollar for the week. Gold ETF holdings continued to decline as holdings at SPDR Gold Shares fell to 998 tonnes for the week. The CFTC data showed that money managers decreased their net long positions by 15325 lots in last week.
Silver prices fell in line with gold prices with spot silver prices at COMEX plunged by 3.93% to $23.74 per ounce for the week. MCX Silver September futures ended over half a percent up to Rs. 63592 per KG over rupee depreciation. The CFTC data showed that money managers increased their net long positions by 5487 lots in last week.
Bullion prices witnessed a decline with Gold prices reported first weekly loss in last five weeks on US FED jitters of asset tapering. The precious metals traded under pressure on stronger dollar and concerns that higher inflation will pace up expectations of FED tapering. The Fed’s stimulus program and other monetary accommodations have been blamed for aggravating price pressure as the US FED has been buying $120 billion in bonds and other assets since the Covid-19 outbreak of March 2020 to support the economy. The US Producers prices data on Friday rose by 8.3% in August, the most in a decade adding pressure to bullion prices. The dollar index witnessed strong recovery gaining 0.59% to 92.58 for the week.
We expect gold prices to trade sideways to up in the coming week with COMEX spot gold resistance at $1833 per ounce and support at $1760 per ounce. At MCX, Gold October prices have near term resistance at Rs 47500 per 10 grams and support at Rs 46400 per 10 gram. COMEX silver spot has near term resistance at $24.80 per ounce with support at $22.90 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.)