MCX Gold support at Rs 47300; geopolitical factors, global inflation worries to impact precious metals

At MCX, Gold February prices have near term resistance at Rs 48400 per 10 grams and support at Rs 47300 per 10 gram.

Gold
COMEX Spot silver has near term resistance at $23.60 per ounce

By Tapan Patel

Commodity prices traded higher with most of the commodities in non-agro segment witnessed buying for the week. Bullion prices rallied on inflation worries and weaker dollar amid weak US data. Crude oil prices extended gains surged more than 6% on strong demand outlook and tighter supplies. Base metals complex traded up on lower supply fears with Nickel prices rallied by 7% on higher demand form EV segment.

Gold prices traded higher with spot gold prices at COMEX rose by 1.19% to $1818 per ounce for the week. Gold February futures at MCX ended 0.69% up at Rs. 47778 per 10 gram as rupee appreciation capped gains. The spot rupee 0.21% up at 74.15 against the dollar for the week. Gold ETF holdings marginally declined as holdings at SPDR Gold Shares fell to 976 tonnes from previous week’s 977 tonnes. The CFTC data showed that money managers decreased their net long positions by 7083 lots in last week.

Silver prices traded higher with spot silver prices at COMEX surged by 2.66% at $22.96 per ounce for the week. MCX Silver March futures ended 1.64% higher to Rs. 61603 per KG for the week. Silver prices outperformed gold supported by strong industrial metals on lower supply fears and higher demand.

Bullion prices rallied last week with gold prices ending higher, missing the best weekly gains since November 2021 with fall in Friday’s trading session. Gold prices reclaimed $1800 territory this week on global inflation worries and rising virus cases which may slow down economic growth. The precious metals traded up after US inflation reported another rise making a strong bull cases for inflation hedge despite of hawkish Fed stance. Federal Reserve officials turn increasingly hawkish, setting the stage for tighter monetary policy this year. Fed Governor Christopher Waller said that three interest-rate increases this year was a “good baseline.” The dollar index ended over half a percent down to 95.70 while US 10 year treasury yields remained near two year highs at 1.79% for the week.

We expect gold prices to trade sideways to up in coming week with COMEX spot gold resistance at $1833/1852 per ounce and support at $1780 per ounce. At MCX, Gold February prices have near term resistance at Rs 48400 per 10 grams and support at Rs 47300 per 10 gram. COMEX Spot silver has near term resistance at $23.60 per ounce with support at $22.30 per ounce. MCX Silver March has important resistance at Rs 59800 per KG and support at Rs 63800 per KG.

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

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