Gold and silver prices fluctuate due to inflation concerns; expect rates to move sideways to up this week

From Tapan Patel

Commodity prices were held firm, with most non-agro commodities trading higher during the week, aided by a weaker dollar. Crude oil prices soared for the sixth week on the back of lower supplies and higher demand for expensive alternative fuels. Base metals traded higher after strong stock indices and the return of Chinese markets despite power shortages.

Gold prices traded weakly, with COMEX spot gold prices dropping 0.22% to $ 1,757 an ounce for the week. December Gold Futures on the MCX rose 1.62% to 47,037 rupees per 10 grams, aided by the rupee’s depreciation. The spot rupee fell over the course of the week against the dollar by more than 2% to 75 marks. Gold ETF holdings continued to drain as SPDR Gold Shares dropped from 986.5 tonnes in the previous week to 985 tonnes. The CFTC data showed that asset managers increased their net long positions by 25718 lots over the past week.

Silver prices traded higher, with spot silver prices on the COMEX rising 0.61% this week to $ 22.68 an ounce. MCX Silver December Futures this week rose more than 2% to Rs 61,801 per KG. The price of silver outperformed gold, aided by a recovery in industrial metals. The CFTC data showed that asset managers increased their net long positions by 1112 lots in the past week.

Gold prices held steady trading while gold prices hovered around $ 1760 an ounce throughout the week. Precious metals continued to fluctuate on mixed global evidence of volatile bond yields and global inflation concerns. Gold prices rose on Friday on disappointed US non-farm payrolls, while US bond yields climbed higher. The U.S. non-farm workforce rose 1.94,000 in September, up 490,000 less than expected. The dollar index ended unchanged while 10-year US Treasury bond yields rose to 1.60% on Friday. Bullion prices were also supported by rising gas and coal prices, which fueled inflation concerns.

We expect gold prices to move sideways for the coming week with the COMEX spot gold resistance at $ 1790 an ounce and support at $ 1730 an ounce. On the MCX, gold prices in December have short-term resistance at Rs 47,500 per 10 grams and support at Rs 46,700 per 10 grams. The COMEX silver spot shows short-term resistance at $ 23.60 per ounce with support at $ 21.50 per ounce Ounce on. MCX Silver December has major resistance at Rs 63,000 per KG and support at Rs 59,000 per KG.

(Tapan Patel is a Senior Analyst (Commodities) on HDFC Securities. Views expressed are our own. Please consult your financial advisor before investing.)