By Tapan Patel
Commodity prices traded mixed with Bullion prices witnessing recovery in the last trading day while silver failed to end in green. Crude oil prices ended lower on demand growth worries and higher supply from the US. Base metals kept firm trading supported by weaker dollar and positive global cues.
Gold prices traded higher with spot gold prices at COMEX rose by 1.14% to $1728 per ounce for the week. Gold August futures at MCX gained by more than 1% at Rs. 50644 per 10 gram as stronger rupee capped upside. The spot rupee ended 0.03% up at 79.85 against the dollar for the week. Gold ETF holdings continued outflows as holdings at SPDR Gold Shares fell to 1006 tonnes from previous week’s 1014 tonnes. The CFTC data showed that money managers have turned net bearish and decreased their net long positions in gold by 12469 lots in the last week.
Silver prices traded lower with spot silver prices at COMEX ended 0.60% down to $18.60 per ounce for the week. MCX Silver September futures fell by 0.82% at Rs 55,131 per kg for the week. Silver prices extended fall during the week as investors rushed out of safer assets despite weaker dollar and firm gold prices. The lower demand for industrial metals on China COIVD worries has also added pressure to the prices. The CFTC data showed that money managers have increased their short positions in silver by 3547 lots.
Bullion prices traded steady halting decline as investors weighed prospects for tighter US monetary policy and concerns over an economic slowdown. Bullion hit the lowest level since March 2021 last week as US Treasury yields eased with selling in dollars. Federal Reserve policy makers are expected to approve another 75 basis-point hike when they meet July 26-27 after raising rates in June by the most since 1994. Gold is heading for a fourth monthly loss on Fed monetary tightening overshadowing concerns about inflation and a slowdown. The dollar index fell by 1.23% to 106.73 for the week giving some respite to bullion traders. Bullion prices may continue to trade under pressure after initial rebound as stronger dollar and Fed speculation will weigh on investment demand for the short term.
We expect gold prices to trade sideways to down this week with COMEX spot gold resistance at $1760 per ounce and support at $1676 per ounce. At MCX, Gold August prices have near term resistance at Rs. 51200 per 10 grams and support at Rs. 49800 per 10 gram. COMEX Spot silver has near term resistance at $19.70 per ounce with support at $17.90 per ounce. MCX Silver September has important resistance at Rs. 57200 per KG and support at Rs. 52800 per KG.
(Tapan Patel, Senior Analyst (Commodities), HDFC Securities. Views expressed are the author’s own.)