Gold, silver price falls as bond yields rise; expect more of the same this week from

By Tapan Patel

Commodity prices traded volatile during the week passed by with bullion prices ended lower while crude oil halted recent rally falling back to below $60 per barrel. Base metals traded strong with Copper soaring to nine years high on supply deficit and higher demand optimism. 

Gold prices traded lower with spot gold prices at COMEX at $1784 per ounce losing more than 2% for the week. Gold prices at MCX ended 2.37% lower at Rs 46,197 per 10 grams in line with global peers and rupee appreciation. The spot rupee ended 0.14% higher against the dollar for the week. Gold ETF holdings continued to witness liquidation as holdings at SPDR Gold Shares fell to 1,128 tonnes against the previous week’s 1,142 tonnes. The CFTC data showed that money managers decreased net long positions by 22,270 lots in last week with slump in gold prices. 

Silver prices ended the week with marginal losses with spot silver prices at COMEX fell by 0.26% to $27.29 per ounce for the week. MCX Silver March futures ended 0.15% down to Rs 69,012 per KG. The CFTC data showed that money managers increased net long positions by 1299 lots in last week. 

Bullion prices pared the previous week’s gains during the week witnessing selling on risk-on sentiments. The precious metals declined with rise in US bond yield and strong equity indices boosted by positive economic data. Bullion price halted six days decline on Friday as prices reversed from support levels on inflation hedge and $1.9 trillion stimulus hopes. US Federal Reserve balance sheet rose to a fresh record high of $7.512 trillion, a $124 billion sequential uptick and highest since May.

We expect bullion prices to trade sideways to up in the coming week with COMEX spot gold having resistance near $1820 per ounce and support at $1760 per ounce. At MCX, Gold April prices have near term resistance at Rs 46,800 per 10 grams and support at Rs 45,600 per 10 gram. COMEX silver spot has near term resistance at $28.50/$30 per ounce with support at $26.20 per ounce. MCX Silver March has important resistance at Rs 72600 per KG and support at Rs 67000 per KG.

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