Gold price soar as investors gauge rising inflation; bullion rates may move sideways to up this week

November 15, 2021 3:11 PM

Commodity prices traded higher with most of the commodities in non-agro segment ended in green except crude oil.

GoldWe expect gold prices to trade sideways to up in coming week with COMEX spot gold resistance at $1920 per ounce and support at $1833 per ounce. (Image: REUTERS)

By Tapan Patel

Commodity prices traded higher with most of the commodities in non-agro segment ended in green except crude oil. Bullion prices ended up on safe haven buying over spike in US inflation. Crude oil prices traded weak on profit booking and weaker demand outlook from OPEC. Base metals traded up on eased worries over power shortage in China and positive demand prospects from US.

Gold prices traded higher with spot gold prices at COMEX rose by 2.56% to $1865 per ounce for the week. Gold December futures at MCX rallied by 2.80% at Rs. 49314 per 10 gram despite of flat rupee. The spot rupee ended marginal down to 74.44 against the dollar for the week. Gold ETF holdings witnessed inflows as holdings at SPDR Gold Shares added to 976 tonnes from previous week’s 975.41 tonnes.

Silver prices traded up with spot silver prices at COMEX rallied by 4.79% at $25.32 per ounce for the week. MCX Silver December futures rose by 4.37% to Rs. 67144 per KG for the week on strong demand outlook for industrial metals. The supply worries and higher demand on US infrastructure bill has boosted buying in silver.

Bullion prices traded up for the second straight week as traders and investors continued to remain cautious on global inflation worries despite of FED’s decision to unwind pandemic stimulus. The US inflation numbers are exceeding FED’s target which has pushed risk premium higher in precious metals despite of stronger dollar. The dollar index rose by 0.86% to 95.13 while 10 year US Treasury yields fell to 1.55% in last week. Bullion prices may keep risk premium higher over inflation worries and speculation that early tapering may hurt economic growth. COMEX spot gold has breached key resistance at $1833 per ounce while near term resistance lies at $1870 and $920 per ounce.

We expect gold prices to trade sideways to up in coming week with COMEX spot gold resistance at $1920 per ounce and support at $1833 per ounce. At MCX, Gold December prices have near term resistance at Rs. 49700 per 10 grams and support at Rs. 48500 per 10 gram. COMEX Spot silver has near term resistance at $26.10 per ounce with support at $24.600 per ounce. MCX Silver December has important resistance at Rs. 70000 per KG and support at Rs. 64500 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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