Bullion costs traded below stress with recovery in US extended term bond yields.
Image: Reuters
By Tapan Patel
Commodity costs traded volatile throughout the earlier week with bullion costs witnessing sharp correction from current highs although Crude oil and base metals extended weekly gains. The dollar index re-gained above 90 territory and ended .18% larger for the week with a rise in US treasury yields.
Gold costs traded reduce with spot gold costs at COMEX fell by 2.60% to $1849 per ounce suffering the worst weekly decline due to the fact November 2020. Gold costs at MCX shed more than 2% fell under Rs 49000 per 10 grams as weaker rupee restricted downside throughout the week. The spot rupee depreciated by .24% against the dollar for the week. Gold ETF holdings witnessed inflows as holdings at SPDR Gold Shares surged to 1182 tonnes throughout the week from earlier week’s 1171 tonnes. The CFTC information showed that income managers enhanced net extended positions to 16 week higher by 15268 lots in final week.
Silver costs suffered heavy losses with spot silver costs at COMEX fell by 3.71% to $25.42 per ounce for the week. MCX Silver March futures plunged by more than 5% to Rs. 64231 per KG on threat off sentiments regardless of a rally in industrial metals. The CFTC information showed that income managers enhanced net extended positions by 180 lots in final week.
Bullion costs traded below stress with recovery in US extended term bond yields. The 10-year US treasury yields hit March 2020 highs which also triggered quick unwinding in dollar. The traders and investors rushed to book income in valuable metals on threat-on sentiments with shopping for in dollar index. Bullion costs declined with positive investment sentiments with powerful rally in equity indices. The US presidential election drama has ended with democrats taking handle more than senate paving the way to US President Joe Biden to peruse his agenda. The expectations of larger stimulus may possibly at some point assistance valuable metals costs with weakness in dollar. The present promoting in bullion costs is anticipated to be quick-lived with bullish extended term trend.
We count on bullion costs to trade sideways to down for quick term with COMEX spot gold getting resistance close to $1900 per ounce and assistance at $1820 per ounce. At MCX, Gold February costs have close to term resistance at Rs. 48200 per 10 grams and assistance at Rs. 50200 per 10 gram. COMEX silver spot has close to term resistance at $26.50 per ounce with assistance at $24.60 per ounce. MCX Silver March has crucial resistance at Rs. 67500 per KG and assistance at Rs. 61500 per KG.
(Tapan Patel is a Senior Analyst (Commodities) at HDFC Securities. The views expressed are the author’s personal. Please seek the advice of your economic advisor ahead of investing.)