By Tapan Patel
Commodity prices traded firm with most commodities in the nonfarm segment, maintained a firm trading range for the week. Bullion prices traded higher despite a stronger dollar, while base metals traded mixed, hovering in the upper trading range. Crude oil prices continued the rally on OPEC’s decision and stalled production.
Gold prices traded higher with COMEX spot gold prices rising 0.33% to $ 1,787 per ounce for the week, gaining for the second week in a row. Gold prices at MCX rose 0.77% to Rs 47,285 per 10 grams, supported by a sharp depreciation of the rupee. The spot rupee continued its weekly fall, losing 0.75% against the dollar on the week. The ETF’s gold holdings at SPDR Gold Shares were unchanged at 1,043 tonnes for the week. CFTC data showed that fund managers reduced their net long positions by 3,647 lots last week.
Silver prices continued to outperform gold, with COMEX spot silver prices up 1.42% to $ 26.47 per ounce for the week. MCX Silver September futures ended 1.83% at Rs 69,118 per KG. Silver prices traded higher, supported by a rally in base metals amid supply concerns and the outlook for strong demand for industrial metals.
Bullion prices traded heavily during the week, limiting the decline with lower US Treasury yields and mixed global economic data. Traders and investors were waiting for key US jobs data throughout the week to assess the Fed’s position at the next FOMC meeting. The US unemployment rate rose 5.9% last month from a forecast of 5.6%. Yields on 10-year US Treasuries fell to 1.43% during the week, boosting precious metal purchases despite the dollar index rally. Bullion prices have also been supported by the increase in cases of the Delta variant of the coronavirus in the UK and other parts of the world, leading to partial lockdowns. Bullion prices have recovered from recent lows in speculation over Fed cut signals and inflation concerns as market participants await clarification from Fed officials.
We expect gold prices to trade sideways to rise over the coming week with COMEX gold spot resistance at $ 1,800 / $ 1,820 an ounce and support at $ 1,750 per ounce. At MCX, gold prices in August have short term resistance at Rs. 47,800 per 10 grams and support at Rs. 46,500 per 10 grams. The COMEX silver spot has short term resistance at $ 27.20 per ounce with support at $ 25.60 per ounce. MCX Silver September has significant resistance at Rs. 71,800 per KG and support at Rs. 67,000 per KG.
(Tapan Patel is Senior Analyst (Commodities) at HDFC Securities. The opinions expressed are those of the author. Please consult your financial advisor before investing.)