By Tapan Patel
Commodity prices traded lower with most of the commodities in the non-agro segment witnessing selling last week. Bullion prices declined on a stronger dollar and hawkish FED which limited demand for safe haven. Crude oil prices traded down on weaker demand and optimism over Iran nuclear deal. Base metals traded weak on China demand fears and lack of positive data despite tight supplies.
Gold prices traded lower with spot gold prices at COMEX fell by more than 3% at $1747 per ounce for the week. Gold October futures at MCX fell by 2.10% at Rs 51479 per 10 gram despite of weaker rupee. The spot rupee fell by 0.16% to 79.78 against the dollar for the week. Gold ETF witnessed outflows as holdings at SPDR Gold Shares declined to 989 tonnes from previous week’s 999 tonnes. The CFTC data showed that money managers have decreased their net long positions in gold by 6561 lots in last week.
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Silver prices traded lower with spot silver prices at COMEX plunged by 8.53% to $19.05 per ounce for the week. MCX Silver September futures shed 6.38% falling to Rs 55496 per KG for the week. Silver prices traded under pressure on weaker demand worries over China economic recovery which has also capped upside in the industrial metals. The CFTC data showed that money managers have increased their long positions in silver by 463 lots in last week.
Bullion prices witnessed selling during the week following the round of mixed economic data which kept investors in dilemma over the slowdown fears. A couple of positive US data releases eased recession fears which triggered some selling in precious metals while the hawkish FED stance over further rate hikes limited bullish bets for the week. The dollar index took a toll on bullish investment sentiments amid weakness in European markets and China-Taiwan tensions. The dollar index rallied by 2.40% to 108.17 for the week. The inflation worries may support bullion prices to limit downside in coming week while the trading range can be narrow ahead of Jackson Hole symposium over the weekend.
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We expect gold prices to trade sideways to down in the coming week with COMEX spot gold resistance at $1780 per ounce and support at $1710 per ounce. At MCX, Gold October prices have near-term resistance at Rs 52200 per 10 grams and support at Rs 50800 per 10 gram. COMEX Spot silver has near term resistance at $19.90 per ounce with support at $18.50 per ounce. MCX Silver September has important resistance at Rs 57500 per KG and support at Rs 54200 per KG.
(Tapan Patel is a Senior Analyst (Commodities) at HDFC Securities. Views expressed are the author’s own. Please consult your financ before investing.)