By Saumil Gandhi
Over the past week, bullion prices extended their losses, as well as both gold and silver prices hit fresh swing lows. Comex Gold closed in red for the first time on a quarter basis after July 2022; on the other side, Silver closed below the $23 mark with losses of more than 5% on a QoQ basis. In the energy basket, crude oil shined in the previous week compared to other commodities. WTI Crude oil prices were close to their weekly highs, mainly supported by positive macro data from the US and lower-level buying from market participants. While natural gas prices retreated last week and closed lower by nearly 1.50%. On the other side, the base metal pack moved in a sideways trend on the back of lackluster global demand and mixed global cues.
Comex Gold prices have underperformed on a quarterly basis as traders pushed back their bets on gold after a more than expected hawkish stance from western central bankers and despite higher interest in the US series of macro data, which indicated US economic resilience, which reduces safe haven demand. In the previous week, Comex spot gold prices fell below the $1900/oz level for the first time since mid-March. The fall was extended after data showed that the United States’ GDP beat expectations and increased by an annualised 2% in the first quarter of this year, adding to the Federal Reserve’s comfort that its rate hikes had not weighed too heavily on growth. Meanwhile, Money managers have decreased their bullish gold bets by 8,154 net-long positions to 86,472, as per weekly CFTC data on futures and options. The net-long position was the least bullish in 15 weeks.
Comex Silver recovered from its weekly low and closed up by 1.55% at $22.77 per ounce. However, it has underperformed on a quarterly and six-month basis, with losses of 5.50% and 4.96%, respectively.
Going forward, investors will closely watch PMI numbers from the US, Europe, the UK, and China, along with U.S. Nonfarm payroll data for the month of June, which will be released on Friday, which could trigger volatility in gold. In the short term, precious metals are in a correction phase, which will likely extend this week.
On the technical front, Comex gold price has taken support around the 61.8% Fib mark; however, on the daily chart of Comex gold rate, short-term moving averages have given a negative cross-over around the $1939 to $1945 zone, so it could act as a short-term resistance zone for this week. Overall, the range expected for Comex Gold is $1880 to $1945 per ounce. Comex Silver price has immediate support at $22.10, followed by $21.45 per ounce, and resistance at $23.50 and then $24.20 per ounce.
Back home, MCX Gold August contract could move in the range of Rs. 57,405 to Rs. 58,880. MCX Silver September contract has resistance at Rs 71925 and support at Rs 68300 for this week.
(Saumil Gandhi, Senior Analyst (Commodities), HDFC Securities. Views expressed are the author’s own. Please consult your financial advisor before investing.)