By Tapan Patel
Commodity prices were down and most of the non-farm segment’s commodities were sold, except for crude oil. Bullion prices traded lower due to a stronger dollar and expectations of a gradual reduction from the FED. Base metals traded lower on weak signals from China amid the housing crisis and lower demand. Crude oil prices extended their weekly gains on the outlook of higher demand and lower supply from the Gulf of Mexico.
Gold prices traded lower as COMEX spot gold prices fell 1.86% to $ 1,754 an ounce for the week. October MCX gold futures fell 1.75% to Rs 45,986 per 10 grams, in line with world gold prices with a flat rupee. The spot rupee ended 2 paisa above the dollar for the week. Gold ETF holdings posted inflows as SPDR’s gold share holdings rose to 1,002 tonnes from 998 tonnes the previous week. Data from the CFTC showed that money managers increased their net long positions by 3,855 lots last week.
Silver prices witnessed a strong sell-off as COMEX silver spot prices fell 5.72% to $ 22.39 an ounce for the week. MCX Silver September futures fell 5.66% to 59,992 rupees per KG for the week. The sale of industrial metals on China’s real estate crisis added pressure to silver prices, extending the slide. CFTC data showed that fund managers reduced their net long positions by 3,834 lots last week.
Bullion prices were lower for the second week in a row thanks to the safety of the dollar and the rebound in US bond yields. Precious metals traded under pressure following strong US economic data that sparked market speculation that the US Fed could end the bond buying program earlier than expected. Better-than-expected retail sales data pushed US Treasury and dollar index yields higher, curbing demand for safe-haven assets. The dollar index rose 0.66% to 93.20 during the week, while 10-year US Treasury yields rose to 1.37% during the week, affecting bullion prices. . Traders and investors are on the lookout for the next US FOMC meeting to be held next week for clues on the Fed’s gradual decline. Bullion prices may limit the slide with a short recovery if the Fed It says nothing about the asset purchase program.
We expect gold prices to trade sideways lower next week with COMEX spot gold resistance at $ 1800 an ounce and support at $ 1720 an ounce. On MCX, October gold prices have short-term resistance at Rs 46,800 per 10 grams and support at Rs 45,600 per 10 grams. The COMEX silver spot has a short-term resistance at $ 23.60 an ounce with support at $ 21.50 an ounce. MCX Silver December has major resistance at Rs 62,500 per KG and support at Rs 58,000 per KG.
(Tapan Patel is Senior Analyst (Commodities) at HDFC Securities. Opinions expressed are those of the author. Consult your financial advisor before investing.)