By Tapan Patel
Commodity prices traded mixed with most of the commodities in the non-agro segment witnessed selling except gold for the week. Bullion prices decline on Friday following strong US data. Crude oil prices plunged by nearly 10% on recession fears and rise in US production. Base metals capped upside on weak US and China manufacturing data.
Gold prices traded higher with spot gold prices at COMEX ended over half a percent up at $1775.50 per ounce for the week. Gold October futures at MCX rose by 1.70% at Rs. 52301 per 10 gram despite a stronger rupee. The spot rupee rose by 0.03% to 79.24 against the dollar for the week. Gold ETF witnessed outflows as holdings at SPDR Gold Shares declined to 999 tonnes from previous week’s 1006 tonnes. The CFTC data showed that money managers increased their net long positions in gold by 38373 lots last week.
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Silver prices traded lower with spot silver prices at COMEX fell by 2.27% to $19.90 per ounce for the week. MCX Silver September futures declined by 1.72% at Rs. 57364 per KG for the week. Silver prices traded under pressure on weaker demand worries over disappointed China data which also capped upside in the industrial metals. The CFTC data showed that money managers have increased their long positions in silver by 9097 lots in the last week.
Bullion prices shed weekly gains on Friday after the US reported stronger than expected private payroll numbers. The improved job market report has raised market expectations of aggressive rate hikes and eased worries over recession. The US Nonfarm payrolls rose 528,000 last month, more than double economists’ estimates. The dollar index rose following the data release adding pressure on the precious metals. The dollar index rose by 0.68% to 106.62 for the week while 10 year US treasury yields fell to 2.82%. The US-China tensions over Taiwan and inflation worries may support bullion prices to limit downside this week. Bullion prices may continue to trade with firm trading for the short term on current market uncertainty.
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We expect gold prices to trade sideways to up this week with COMEX spot gold resistance at $1810 per ounce and support at $1740 per ounce. At MCX, Gold October prices have near term resistance at Rs. 52500 per 10 grams and support at Rs. 51200 per 10 gram. COMEX Spot silver has near term resistance at $20.90 per ounce with support at $19.20 per ounce. MCX Silver September has important resistance at Rs. 60500 per KG and support at Rs. 55800 per KG.
(Tapan Patel, Senior Analyst (Commodities), HDFC Securities. Views expressed are the author’s own.)