MCX Gold support at Rs 47100; geopolitical factors, rising energy cost to impact precious metals

At MCX, Gold February prices have near term resistance at Rs 47800 per 10 grams and support at Rs 47100 per 10 gram

gold, silver, MCX, bullion
We expect gold prices to trade sideways to up in the coming week with COMEX spot gold resistance at $1830 per ounce

By Tapan Patel

Commodity prices traded mixed with most of the commodities in the non-agro segment witnessing selling except energy complex. Crude oil prices rallied nearly 5% on strong demand outlook and geopolitical risk in Kazakhstan. Bullion prices traded down with a surge in US bond yields while base metals complex traded weak on lower demand fears on rising COVID-19 restrictions in China and other parts of the world. 

Gold prices traded lower with spot gold prices at COMEX down 1.78% to $1796 per ounce for the week. Gold February futures at MCX ended 1.35% lower at Rs. 47452 per 10 gram last week, despite rupee appreciation. The spot rupee ended marginal up at 74.31 against the dollar last week. Gold ETF holdings witnessed inflows as holdings at SPDR Gold shares rose to 977 tonnes from previous week’s 976 tonnes. The CFTC data showed that money managers decreased their net long positions by 3893 lots last week.

Silver prices traded lower with spot silver prices at COMEX falling by 4.03% at $22.37 per ounce last week. MCX Silver March futures ended 3.28% lower to Rs 60607 per kg for the week. Silver prices underperformed gold with falling the most among the non-agro commodities following additional selling in industrial metals with lower demand concerns with rising COVID cases. 

Bullion prices witnessed selling paring previous gains with gold prices reporting the worst weekly decline since November 2021. Bullion prices traded lower with stronger dollar and a rally in US bond yields on risk on sentiments. The traders and investors reacted to the release of US FOMC minutes with rising expectations of a sooner rate hike despite inflation worries. The dollar index ended marginal up while US 10 year treasury yields surged to two year highs at 1.76% for the week. Gold prices are still holding the strong support range of $1780 per ounce while capping upside at $1830 per ounce on mixed global cues on virus worries and FED speculation. Silver prices may eye for support at $21.40 per ounce with weaker base metals. The precious metals may add a risk premium on geopolitical factors and rising energy costs in Europe.

We expect gold prices to trade sideways to up in the coming week with COMEX spot gold resistance at $1830 per ounce and support at $1780 per ounce. At MCX, Gold February prices have near term resistance at Rs 47800 per 10 grams and support at Rs 47100 per 10 gram. COMEX Spot silver has near term resistance at $23.60 per ounce with support at $21.40 per ounce. MCX Silver March has important resistance at Rs 59500 per kg and support at Rs 62500 per kg.

(Tapan Patel, Senior Analyst (Commodities), HDFC Securities. Views expressed are the author’s own.)

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