By Tapan Patel
Commodity prices traded mixed with most of the commodities in the non-agro segment kept volatile trading for the week. Bullion prices continued to soar on geopolitical risk while crude oil prices extended gains on tight supplies over geopolitical tensions. Base metals kept firm trading on strong demand and lower inventory levels with Nickel and Aluminium soared on supply disruption fear from Russia.
Gold prices traded volatile last week with spot gold prices at COMEX witnessing a zigzagged move and ended 0.48% down at $1889 per ounce for the week. Gold April futures at MCX ended 0.22% up at Rs. 50221 per 10 gram supported by rupee depreciation. The spot rupee fell by 0.84% at 75.29 against the dollar for the week. Gold ETF holdings witnessed inflows as holdings at SPDR Gold Shares rose to 1027 tonnes from previous week’s 1024 tonnes as geopolitical risk increased investment into safe haven assets.
Silver prices rallied with spot silver prices at COMEX rose by 1.47% to $24.27 per ounce for the week. MCX Silver March futures ended 0.19% up to Rs. 64023 per KG for the week. Silver prices outperformed gold for the week on higher demand outlook for industrial metals combined with safe haven buying.
Bullion prices witnessed high volatility after Russia declared war on Ukraine. Gold prices fell below $1900 per ounce from the highs of $1970 per ounce on a round of events that shook global markets. The precious metals rallied after Russia attacked Ukraine which boosted safe haven buying along with the dollar. The invasions has led to severe financial sanctions on Russia including a decision to penalize Russia’s central bank and exclude some Russian banks from the SWIFT messaging system, used for trillions of dollars’ worth of transactions around the world. Bullion prices may regain strength on inflation worries while the Bank of Russia said it will start buying gold again, nearly two years after it ended a long run of purchases.
The escalated geopolitical risk may continue to support precious metals prices in near term while market players may also watch for US FED action over the stance of raising interest rates.
We expect gold prices to trade up this week with COMEX spot gold resistance at $1970 per ounce and support at $1870 per ounce. At MCX, Gold April prices have near term resistance at Rs. 52200 per 10 grams and support at Rs. 49500 per 10 gram. COMEX Spot silver has near term resistance at $25.60 per ounce with support at $23 per ounce. MCX Silver May has important resistance at Rs. 68000 per KG and support at Rs. 62900 per KG.
(Tapan Patel, Senior Analyst (Commodities), HDFC Securities. Views expressed are the author’s own.)
