by Taban Battle
Commodity prices were traded in mixed with most of the non-farm commodities traded higher except for Crude Oil. Bullion prices ended even though the dollar was flat as US bond yields fell. Crude oil prices traded poorly due to profit taking and weak demand from China. Base metals traded on the back of easing concerns about energy shortages in China and positive demand expectations from the US.
Gold prices are up with Comex spot gold up nearly 2% to $1,818 an ounce during the week. MCX gold futures for December ended 0.71% higher at Rs. 47,972 per 10 grams limits the gains from the sharp appreciation of the rupee. The spot rupee rose more than 1% to 74.46 against the dollar during the week. ETF holdings saw outflows as holdings in SPDR gold stocks fell to 975.41 tons from 981.14 tons in the previous week. CFTC data showed that money managers reduced their net long positions by 2,363 contracts last week.
Silver prices traded with COMEX spot silver prices are up 1.08% at $24.16 per ounce during the week. MCX Silver futures for December ended marginally lower at Rs. 64,332 per kilogram for the week at a stronger Rs. Commodity Futures Trading Commission (CFTC) data showed that money managers reduced their net long positions by 5,239 contracts last week.
Bullion prices rose to see strong buying in the second half of the week after the US Federal Open Market Committee meeting as US bond yields fell. Better-than-expected US non-farm payroll data dragged down US bond yields, attracting buying of precious metals. The US Federal Reserve announced that it will scale back its $120 billion in bond purchases in pandemic-era aid from November. The number of non-farm payrolls in the US rose by 531,000 in October, the most in three months according to data released on Friday. The dollar index rose 0.21% to 94.32 while the 10-year US Treasury yield fell to 1.45% from 1.56% last week.
Bullion prices may keep the risk premium higher due to inflation concerns and speculation that early tapering could hurt economic growth.
We expect gold prices to trade sideways this week, hitting COMEX Gold spot resistance at $1,833 per ounce and support at $1,780 per ounce. On MCX, December gold prices have near-term resistance at Rs 48,300 per 10g and support at Rs 47,500 per 10g. Comex spot silver has near-term resistance at $25.30 an ounce with support at $22.80 an ounce. MCX Silver December has significant resistance at Rs 67,000 per kg and support at Rs 62,500 per kg.
(Taban Patel, Senior Analyst (Commodities) at HDFC Securities. Opinions expressed are those of the author.)