Gold, silver prices pulled lower by rising bond yields; analysts now expect some pullback
Updated: Mar 01, 2021 8:54 AM
The precious metals declined during the previous week with rising US bond yield which also boosted buying in dollar.
We expect bullion prices to trade sideways to up in the coming week witnessing some pullback.
By Tapan Patel
Commodity prices traded mixed witnessing high volatility during the week passed by with bullion prices ended lower while crude oil prices traded higher on lower supply concerns. Base metals ended mixed with copper managing to end in green.
Gold prices traded lower with spot gold prices at COMEX plunged by nearly 3% to $1734 per ounce for the week. Gold prices at MCX ended 1% down at Rs 45,736 per 10 grams limiting downside on sharp rupee depreciation. The spot rupee rescued domestic gold prices from heavy sell-off, ending more than 1% lower against the dollar for the week. Gold ETF holdings declined as holdings at SPDR Gold Shares fell to 1093 tonnes against 1128 tonnes in the previous week. The CFTC data showed that money managers decreased net long positions by 186 lots last week.
Silver prices fell for the second week with spot silver prices at COMEX fell by 2.28% to $26.67 per ounce for the week. MCX Silver March futures fell by 2.50% to Rs. 67261 per KG. The selling in base metals pushed silver prices southwards during the week. The CFTC data showed that money managers decreased net long positions by 1569 lots last week.
Bullion prices witnessed a sell-off with gold reported second monthly loss falling by 8% for the year as risk-on sentiments drew investors out of safe-haven assets. The precious metals declined during the week with rising US bond yield which also boosted buying in dollar. The 10 year US treasury yields rose to the pre-pandemic levels of last year after FED Chairman vowed to keep the accommodative policy to support economic recovery. The dollar index rose to 1 week high being the best alternative to gold amid slump in equity indices in the second half of the week.
We expect bullion prices to trade sideways to up in the coming week witnessing some pullback with COMEX spot gold having resistance near $1760 per ounce and support at $1690 per ounce. At MCX, Gold April prices have near term resistance at Rs 46,500 per 10 grams and support at Rs 45,400 per 10 gram. COMEX silver spot has near term resistance at $27.50 per ounce with support at $26.20 per ounce. MCX Silver March has important resistance at Rs 70,500 per KG and support at Rs 65,000 per KG.
(Tapan Patel is a Senior Analyst, Commodities, at HDFC securities. The views expressed are the author’s own. Please consult your financial advisor before investing.)