By Tapan Patel
Commodity prices traded lower with most of the commodities in non-agro segment witnessed decline during the week with crude oil and metals falling the most followed by bullion prices. The stronger dollar and slowdown fears has capped upside in commodities. Gold prices traded lower with spot gold prices at COMEX fell by 1.49% at $1712 per ounce for the week. Gold October futures at MCX fell by 1.70% to Rs 50368 per 10 gram along with stronger rupee. The spot rupee rose by 0.09% to 79.80 against the dollar for the week. Gold ETFs continued outflows as holdings at SPDR Gold Shares declined to 973 tonnes from previous week’s 984 tonnes.
Bullion prices extended weekly decline with as thegreenbackjumped to a new 20-year high, while Treasury yields also advanced.The growing uncertainty over hawkish U.S. monetary policy weighed on appetite for the precious metals pushing dollar up.The Fed is committed to tackle inflation reaching 40-year highs on rising energy and food costs. Several members of the central bank recently indicated that interest rates are likely to keep increasing until inflation is substantially closer to the bank’s 2% target. The record energy prices in Europe has also supported dollar against Euro which has lowered demand for precious metals. The dollar index ended 0.67% up at 109.53 for the week while US 10 year treasury yields were at 3.19% on Monday.
We expect gold prices to trade sideways to down this week with COMEX spot gold resistance at $1740 per ounce and support at $1676 per ounce. At MCX, Gold October prices have near term resistance at Rs 50800 per 10 grams and support at Rs 49500 per 10 gram. COMEX Spot silver has near term resistance at $18.90 per ounce with support at $17.40 per ounce. MCX Silver December has important resistance at Rs 55000 per KG and support at Rs. 52000 per KG.
(Tapan Patel is a Senior Analyst (Commodities) at HDFC securities. Views expres the author’s own. Please consult your financial advisor before investing.)
