Gold, silver prices rise on US inflation concerns; expect rates to trade sideways this week

June 28, 2021 9:44 AM

Bullion prices witnessed firm trading during the week on weaker dollar and US inflation concerns.

Gold price todayGold ETF holdings witnessed outflows as holdings at SPDR Gold Shares fell to 1043 tonnes from 1053 tonnes for the week. (Image: REUTERS)

By Tapan Patel

Commodity prices traded frim with most of the commodities in the Non-Agro segment ending in green for the week.  Bullion prices traded higher on weaker dollar while base metals rallied on strong demand over US infrastructure push.  Crude oil prices extended rally on strong fuel demand recovery form US and Europe. 

Gold prices traded higher with spot gold prices at COMEX rose by nearly 1% to $1781 per ounce for the week reporting the first weekly gains since May 2021. Gold prices at MCX ended up by 0.42% at Rs 46,925 per 10 gram supported by rupee depreciation. The spot rupee fell by 0.44% against the dollar for the week extending downside. Gold ETF holdings witnessed outflows as holdings at SPDR Gold Shares fell to 1043 tonnes from 1053 tonnes for the week. The CFTC data showed that money managers decreased their net long positions by 38288 lots in last week.

Silver prices rallied outperforming gold with spot silver prices at COMEX rose by 1.22% to $26.10 per ounce for the week. MCX Silver July futures ended up by 0.41% to Rs 67,873 per KG. Silver prices traded firm supported by rally in base metals over strong demand outlook for industrial metals.

Bullion prices witnessed firm trading during the week on weaker dollar and US inflation concerns. The US Federal Reserve chairman signalled higher inflation and slower FED tapering which supported precious metals to trade up. The US inflation rose for the third month boosting buying in gold over dollar selling. The dollar index fell by 0.41% to 91.85 while US 10 year treasury yields were muted near 1.52% during the week. Bullion prices are expected to trade in current range on lack of fresh triggers as traders and investor will look for the cues on FED tapering of the bond-buying programme. 

We expect gold prices to trade sideways to up in the coming week with COMEX spot gold resistance at $1800/$1820 per ounce and support at $1750 per ounce. At MCX, Gold August prices have near term resistance at Rs 47,600 per 10 grams and support at Rs 46,500 per 10 gram. COMEX silver spot has near term resistance at $27 per ounce with support at $25.10 per ounce. MCX Silver September has important resistance at Rs 71,200 per KG and support at Rs 67,000 per KG.

(Tapan Patel is  Senior Analyst (Commodities) at HDFC securities. Views expressed are the author’s own. Please consult your financial advisor before investing.)

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