Bullion prices may trade sideways with positive bias this week on global uncertainties
At MCX, Gold December contract may continue to trade in upper range with strong support at Rs 49,800 per 10 grams with resistance at Rs 51,800 per 10 grams as rupee depreciation may limit downside.
November 16, 2020 / 11:54 AM IST
Commodity prices traded volatile during last week as traders and investors filtered the US elections result and vaccine hopes. Bullion prices pared previous week's gains and ended weak, witnessing correction on risk-on sentiment.
Crude oil and base metals complex traded higher with crude oil rallying the most among non-agro space on positive global cues with rally in equity indices. The dollar index also joined the rally in riskier assets ended half a percent up for the week which dampened safe haven demand for precious metals.
Bullion prices traded lower during the week witnessing correction on risk-on sentiments on vaccine hopes news. COMEX spot gold prices ended in red by 3 percent to $1,889 per ounce as prices failed to sustain above $1,940 levels. Spot silver prices at COMEX ended down by 3.68 percent to $24.67 per ounce for the week. At MCX Gold December contract ended 2.39 percent lower while MCX Silver December lost 2.44 percent as rupee depreciation kept down side limited. The spot rupee depreciated by 0.54 percent against the dollar during the week.
Bullion prices witnessed sharp selloff in the start of the week on improved investment sentiments after Pfizer announced that vaccine in trial has been 90 percent effective to treat corona virus. Traders and investors side-lined worries over slower economic growth and record virus cases in Europe and US boosting buying in riskier assets. Markets later weighed the progress and safety concerns of the vaccine in development which drew investors to focus on current market uncertainty. Bullion prices kept down side limited after John Hopkins University data showed record daily increase in virus infections in US. The fear of lockdown measures in Japan also triggered some buying in bullion later on Friday.
The Gold ETF holdings at SPDR gold shares fell to 1,234 tonnes from previous week's 1,260.20 tonnes. The world ETF holdings data compiled by Bloomberg showed that global ETF holdings slipped to 3,436.4 tonnes to the six weeks low.
Bullion prices are expected to trade sideways to up in coming week on current global market uncertainty while traders and investors are awaiting fresh triggers from the market after vaccine hyped market in last week. The record surge in virus infections, loose monetary policy and slower economic growth may support bullion prices at lower levels. COMEX spot gold prices have held strong support near $1850 per ounce while short term resistance lies at $1920 and $1940 per ounce for short term. COMEX spot silver prices have important support at $23.50 per ounce and resistance at $26 per ounce.
At MCX, Gold December contract may continue to trade in upper range with strong support at Rs 49,800 per 10 grams with resistance at Rs 51,800 per 10 grams as rupee depreciation may limit downside. MCX Silver December has support at Rs 60,500 per kg and resistance at Rs 65,000 per kg for coming week.
(Tapan Patel is the Senior Analyst - Commodities at HDFC Securities.)Disclaimer: The views and investment tips expressed by investment expert on Moneycontrol.com are his own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.