By Tapan Patel
Commodity prices traded higher with most of the commodities in non-agro segment traded positive for the second week. Bullion prices traded higher on weak global cues on safe-haven buying. Crude oil prices gained by nearly 2% over tight supplies and strong demand ahead of the summer season. Base metals traded firm on demand growth prospectus despite of fall in equity indices.
Gold prices traded higher with spot gold prices at COMEX rose by 0.39% to $1854 per ounce for the week. Gold June futures at MCX gained by 0.17% to Rs. 50913 per 10 gram along with rupee depreciation. The spot rupee fell by 0.03% at 77.57 against the dollar for the week. Gold ETF holdings witnessed inflows as holdings at SPDR Gold Shares rose to 1070 tonnes from previous week’s 1063 tonnes. The CFTC data showed that money managers have increased their net long positions by 22924 lots in last week.
Silver prices rallied with spot silver prices at COMEX rose by 1.55% to $22.11 per ounce for the week. MCX Silver May futures gained by 1.15% to Rs. 62116 per KG for the week. Silver prices surged with strong demand outlook for industrial metals and safe haven buying. The CFTC data showed that money managers have decreased their net long positions by 1211 lots to the three year low.
Bullion prices rose for the second week on the trot supported by weaker dollar and global growth worries. US Treasury yields were subdued, with the benchmark 10-year note hitting a fresh six-week low. Inflation fears continue to dissipate even as data and corporate announcements point to slower economic growth. US FED minutes showed that it favoured additional 50 basis point rate hikes at its June and July 2022 meetings, as per expectations. Global equity indices fell while dollar index retreated from 20 years highs as investors and traders weighed higher inflation and aggressive central bank stance which may hinder economic recovery. The dollar index fell by 1.44% to 101.67 mark boosting buying in the precious metals. Gold prices have rebounded from strong support range of $1780 per ounce setting course for $1870/$1920 per ounce for short term.
We expect gold prices to trade sideways to up in the coming week with COMEX spot gold resistance at $1870 per ounce and support at $1820 per ounce. At MCX, Gold June prices have near term resistance at Rs. 51500 per 10 grams and support at Rs. 50200 per 10 gram. COMEX Spot silver has near term resistance at $23.20 per ounce with support at $21 per ounce. MCX Silver July has important resistance at Rs. 63500 per KG and support at Rs. 60200 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)