Bullion Markets Under Pressure As Investors Incline Towards Riskier Assets

Prices of base metals such as Aluminum (+4.1%), Copper (+9.2%), Iron Ore (+0.7%), Lead (+1.7%) and Zinc (+1.1%) continued its uptrend for the third consecutive week, with bulls making their mark in the COMEX Market on the back of buoyant demand. As for precious metals, both, gold and silver rallied on Monday and Tuesday, however, they lost all the gains during the rest of the week, losing 0.5% and 1.0% respectively as compared to the closing prices of the week before.

Gold and Silver made new lows of $1,734 and $26.67 respectively on Friday as the 10 year US bond yields continued to rise, returning to the pre-pandemic levels of last year after FED Chairman vowed to keep the accommodative policy to support economic recovery. US Dollar as well continued to become stronger, being the best alternative to gold amid a crash in equity indices in the second half of the week.

Crude oil prices reached to the highest levels in more than 11 months on Thursday, after the U.S. Federal Reserve assured that interest rates would stay low for a while and also supported by lower crude production in the US, after a rare winter storm in Texas. However, the prices are expected to weaken, as the OPEC Plus group will discuss a modest easing of oil supply curbs from April.

We expect the precious metal prices to trade volatile in sideways to marginally negative trend in the current week. The investors will have to keep an eye on the most important data – the Non-farm Payrolls report and the Average Hourly Earnings portion during the week, which has an inverse relationship with gold. Along with that, the COVID-19 vaccination drive expansion may also continue to weigh on gold and silver.

For the week, we expect gold in COMEX market to be in the range of $1,680 to $1,790, while silver is expected to be in the range of $26.2 to $28.0. Whereas, for bullion market traders, we assume gold futures to trade in the range of 45,550 – 45,300 to 46,500 – 46,800.

Page 8, NavGujarat Samay, 2nd March’21

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