By Taban Patel
Commodity prices traded higher with most non-farm commodities gaining during the week supported by a weak dollar. Bullion prices were trading higher on inflation concerns while crude oil prices rose due to higher demand and reduced supply concerns. Base metals traded higher, with zinc up nearly 20% during the week due to supply disruptions due to energy shortages.
Gold trading prices closed strongly with COMEX spot gold prices down 0.60% to $1,768 per ounce during the week. MCX Gold futures for December rose 0.37% to Rs 47,213 per 10 grams, boosted by a depreciation of the rupee. The spot rupee fell 0.36% to 75.26 mark per dollar during the week. ETF holdings continued their outflows as holdings in SPDR gold stocks fell to 980.10 tons from 985 tons in the previous week. CFTC data showed that money managers increased their net long positions by 1,966 contracts in the past week.
Silver prices are up with Comex silver prices up 2.79% at $23.31 an ounce during the week. MCX Silver futures for December rose more than 2% to Rs63,271 per kilogram during the week. Silver prices outperformed gold backed by a strong rally in industrial metals with higher demand. CFTC data showed that money managers increased their net long positions by 342 contracts in the past week.
Bullion prices traded higher over the past week on the back of safe haven buying on global inflation fears and a weak dollar. Precious metals prices gained momentum with the rising energy cost of industries and the potential for higher inflation ahead of the winter energy shortage. Bullion prices pared some weekly gains on Friday as US bond yields rose as better-than-expected retail sales data spurred expectations of a Fed cut soon. US retail sales for September showed growth of nearly 14% year over year and 0.7% since August. The dollar index closed 0.14% lower while the 10-year US Treasury yield rose to 1.575% on Friday. Gold prices are facing strong resistance near $1800 an ounce on the charts to resume the uptrend.
We expect gold prices to trade sideways next week with spot gold resistance at $1800 an ounce and $1750 an ounce support. On MCX, December gold prices have near-term resistance at Rs 47,900 per 10g and support at Rs 46,700 per 10g. Comex silver price has near-term resistance at $23.90 an ounce with support at $22.50 an ounce. MCX Silver December has significant resistance at Rs 65,000 per kg and support at Rs 60,200 per kg.
(Tapan Patel is a Senior Analyst (Commodities) at HDFC Securities. The opinions expressed are those of the author. Please consult your financial advisor before investing.)