Tapan Patel
Commodity prices traded mixed with most of the commodities in non-agro segment kept volatile trading for the week. Bullion prices continued to soar on geopolitical risk while crude oil prices declined on eased supply worries over Iran nuclear talks. Base metals ended higher on strong demand and lower inventory levels along with weaker dollar.
Gold prices traded higher with spot gold prices at COMEX rallied by 2.13% to $1898 per ounce for the week. Gold April futures at MCX ended 2.03% up at Rs. 50112 per 10 gram despite of sharp rupee appreciation. The spot rupee rose by 0.95% at 74.66 against the dollar for the week. Gold ETF holdings witnessed inflows as holdings at SPDR Gold Shares rose to 1024 tonnes from previous week’s 1012 tonnes. The CFTC data showed that money managers have increased their net long positions by 40757 lots in last week.
Silver prices extended gains with spot silver prices at COMEX rose by 1.43% to $23.92 per ounce for the week. MCX Silver March futures ended 1.45% up to Rs 63902 per KG for the week. The CFTC data showed that money managers have increased their net long positions by 7506 lots in last week. Silver prices are stuck in range with mixed global cues which has capped industrial demand.
The precious metal extended gains adding risk premium rallied for the third week on the trot. Gold prices rallied to eight month highs on safe haven buying over Russia – Ukraine tensions and higher inflation worries as traders and investors outweighed possible rate hike from US FED in March. US President Joe Biden said on Friday he’s now convinced Russian President Vladimir Putin has decided to move against Ukraine and that an invasion – including a strike on Kyiv – could come within days.
The dollar index pared weekly gains ended marginal down at 96.04. The escalated geopolitical risk may continue to support bullion prices in near term while market players may also keep eye on upcoming US data to gauge the pace of US rate hike.
We expect gold prices to trade sideways to up in coming week with COMEX spot gold resistance at $1920 per ounce and support at $1870 per ounce. At MCX, Gold April prices have near term resistance at Rs 50800 per 10 grams and support at Rs 49200 per 10 gram. COMEX Spot silver has near term resistance at $24.90 per ounce with support at $22.90 per ounce. MCX Silver March has important resistance at Rs 65600 per KG and support at Rs 61500 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.)
