Gold, silver prices traded flat last week as economic data improved; rates may hold steady this week

By Tapan Patel

Commodity prices traded mixed during the week passed by with most of the commodities in Non-agro segment kept firm trading range except crude oil. Bullion prices kept range-bound trading while base metals traded higher on strong demand outlook over green spending.  Crude oil prices traded weak on demand growth worries and higher supplies.

Gold prices traded steady with spot gold prices at COMEX ended flat to $1777.20 per ounce for the week. Gold prices at MCX ended marginal up to Rs. 47532 per 10 gram supported by rupee depreciation. The spot rupee ended 0.89% lower against the dollar for the week. Gold ETF holdings continued outflow as holdings at SPDR Gold Shares remained unchanged near 1020 tonnes during the week. The CFTC data showed that money managers increased their net long positions by 4534 lots in last week.

Silver prices traded firm with spot silver prices at COMEX ended marginal up to $26.01 per ounce for the week. MCX Silver May futures ended flat to Rs. 68674 per KG. The CFTC data showed that money managers increased their net long positions by 5520 lots in last week. 

Bullion prices traded mixed during the week keeping the firm trading range on weaker dollar and positive economic data. Gold prices failed to break the psychological level of $1800 at COMEX despite of fall in US bond yields and decline in dollar index. The upside in precious metals were capped by stronger than expected economic data from US and ease of lockdown measures in Europe. The dollar index fell below 91 mark shedding 0.76% while US 10 year treasury yields ended to 1.55% from the 14 month high of 1.77% made recently. The rising cases in emerging markets like India, Brazil and dovish stance from Fed may support bullion prices to trade firm in short term. The traders and investors may eye us FOMC meeting due next Wednesday.

We expect gold prices to trade sideways to up in coming week with COMEX spot gold resistance at $1800 per ounce. The break above $1800 may lead prices towards $1840 with support at $1750 per ounce. At MCX, Gold June prices have near term resistance at Rs. 48200 per 10 grams and support at Rs. 46800 per 10 gram. COMEX silver spot has near term resistance at $26.80 per ounce with support at $24.60 per ounce. MCX Silver July has important resistance at Rs. 72500 per KG and support at Rs. 67500 per KG.

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