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Gold, silver below stress as dollar strengthens count on bullion rates to trade sideways this week


By Tapan Patel

Commodity rates traded mixed with most of the commodities in the Non-Agro segment traded firm except gold. Crude oil rates extended rally on sturdy fuel demand recovery kind US and Europe. Base metals ended in green as China continued to raise rates discarding inflation worries. Bullion rates traded below stress on stronger dollar following sturdy financial information.



Gold rates traded decrease with spot gold rates at COMEX fell by .74% to $1877 per ounce for the week. Gold rates at MCX ended in green by .64% at Rs 48,903 per 10 gram supported by rupee depreciation. The spot rupee fell by .10% against the dollar for the week extending weekly declines. Gold ETF holdings witnessed inflows as holdings at SPDR Gold Shares rose to 1045 tonnes from 1043 tonnes for the week. The CFTC information showed that revenue managers decreased their net extended positions by 2782 lots in last week.



Silver rates ended in green with spot silver rates at COMEX rose by .45% at $27.92 per ounce for the week. MCX Silver July futures ended up by .96% to Rs 72,227 per KG. Silver rates witnessed some assistance following purchasing on industrial metals. The CFTC information showed that revenue managers enhanced their net extended positions by 1855 lots in last week.

Bullion rates traded below stress for the duration of the week with gold rates at COMEX struggled to sustain above $1900 per ounce for the second week even though silver rates capped caped downside with firm base metals. The valuable metals declined on sturdy dollar recovery following positive US information as larger inflation signalled financial recovery. Bullion rates hovered in narrow trading variety on market place speculation and investors’ dilemma more than FED policy actions. The dollar index ended with .46% gains at 90.56 even though US 10 year treasury yields fell to 1.45% for the duration of the week. The dollar index fetched secure haven purchasing from valuable metals ahead of US FOMC meeting this week as current positive information from US has raised market place expectations of transform in FED stance. Bullion rates could retain present trading variety with bullish bias for quick term awaiting fresh triggers. 

We count on gold rates to trade sideways to up in the coming week with COMEX spot gold resistance at $1920 per ounce and assistance at $1850 per ounce. At MCX, Gold August rates have close to term resistance at Rs 49,700 per 10 grams and assistance at Rs 48,200 per 10 gram. COMEX silver spot has close to term resistance at $28.90 per ounce with assistance at $26.80 per ounce. MCX Silver July has crucial resistance at Rs 74,400 per KG and assistance at Rs 69,800 per KG.

(Tapan Patel is a Senior Analyst (Commodities) at HDFC securities. Views expressed are the author’s personal. Please seek advice from your economic advisor ahead of investing.)



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