Gold, Silver traded under pressure last-week; Bullions may continue sideways movement in short-term

By Tapan Patel

Commodity prices traded volatile during the week passed by with most of the commodities in non-agro segments traded under pressure on stronger dollar. Silver prices made a strong comeback amongst the non-agro commodities while crude oil prices kept lower trading on demand growth concerns. The dollar index rose by 0.38% for the week despite of stimulus hopes. 

Gold prices traded weak with spot gold prices at COMEX ended down by 0.43% to $1848 per ounce finishing the month in red. Gold prices at MCX ended marginal down to Rs. 49096 per 10 grams for the week. The spot rupee appreciated by 0.03% against the dollar for the week. Gold ETF holdings witnessed outflows as holdings at SPDR Gold Shares fell to 1160 tonnes during the week from previous week’s 1173 tonnes. However, the CFTC data showed that money managers increased net-long positions to 3 week high by 10720 lots in last week.

Silver prices ended higher with spot silver prices at COMEX rallied by nearly 6% to $26.99 per ounce for the week. MCX Silver March futures rose by 4.60% to Rs. 69706 per KG outperforming gold prices. Silver prices rallied on Friday as traders piled into silver on short squeeze sparked by Reddit posters call.  

Bullion prices traded under pressure on strong investors’ appetite for dollar and rising treasury yields. Precious metals kept the lower trading range during the week with monotonous trading on lack of fresh triggers. The US FED kept the pace of bond-buying program unchanged which boosted buying in dollar despite of ultra-low interest rates. However, the expectations of more stimulus announcement from Biden administration have kept downside limited in bullion prices during the week.

We expect bullion prices to trade sideways to down for short term with COMEX spot gold having resistance near $1876 per ounce and support at $1820 per ounce. At MCX, Gold April prices have near term resistance at Rs. 49900 per 10 grams and support at Rs. 48700 per 10 gram. COMEX silver spot has near term resistance at $27.60 per ounce with support at $25.80 per ounce. MCX Silver March has important resistance at Rs. 72000 per KG and support at Rs. 65000 per KG.

(Tapan Patel is a Senior Analyst (Commodities) at HDFC securities. The views expressed are the author’s own. Please consult your financial advisor before investing.)