Gold, silver price fluctuates over inflation worries; expect rates to move sideways to up this week

October 11, 2021 8:54 AM

Bullion prices kept firm trading with gold prices hovered near $1760 per ounce throughout the week.

Bullion prices kept firm trading with gold prices hovered near $1760 per ounce throughout the week. (Image: REUTERS)

By Tapan Patel

Commodity prices traded firm with most of the commodities in the non-agro segment trading higher during the week supported by softer dollar.  Crude oil prices rallied for the sixth week on the trot on lower supplies and higher demand on costly alternate fuels. Base metals traded higher following strong equity indices and return of Chinese markets despite of power shortages. 

Gold prices traded weak with spot gold prices at COMEX ended 0.22% down to $1757 per ounce for the week. Gold December futures at MCX rallied by 1.62% to Rs 47,037 per 10 gram supported by rupee depreciation. The spot rupee fell by more than 2% to 75 mark against the dollar for the week. Gold ETF holdings continued outflows as holdings at SPDR Gold Shares declined to 985 tonnes from previous week’s 986.5 tonnes. The CFTC data showed that money managers increased their net long positions by 25718 lots in last week.

Silver prices traded higher with spot silver prices at COMEX ended 0.61% up at $22.68 per ounce for the week. MCX Silver December futures rose by more than 2% to Rs 61,801 per KG for the week. Silver prices outperformed gold supported by a recovery in industrial metals. The CFTC data showed that money managers increased their net long positions by 1112 lots in last week.

Bullion prices kept firm trading with gold prices hovered near $1760 per ounce throughout the week. The precious metals remained fluctuated on mixed global cues over volatile bond yields and global inflation worries. Bullion prices gained on Friday on disappointed US Non-Farm payroll data while surge in US bond yields capped upside. The US Non-farm payroll rose by 1,94,000 in the month of September lesser than expected with an increase of 4,90,000. The dollar index ended flat while 10 year US Treasury yields rose to 1.60% on Friday. Bullion prices were also supported by rising gas and coal prices which has fuelled inflation worries.

We expect gold prices to trade sideways to up in the coming week with COMEX spot gold resistance at $1790 per ounce and support at $1730 per ounce. At MCX, Gold December prices have near term resistance at Rs 47,500 per 10 grams and support at Rs 46,700 per 10 gram. COMEX silver spot has near term resistance at $23.60 per ounce with support at $21.50 per ounce. MCX Silver December has important resistance at Rs 63,000 per KG and support at Rs 59,000 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.)

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