Gold and Silver - July 30, 2021 - Reliance Securities
(Time Zone: UTC)
Mr. Sriram Iyer, Senior Research Analyst at Reliance Securities
International and domestic gold and silver prices eked out small gains this week.
Both gold and silver prices were weak initially after a U.S. Federal Reserve policy statement said the U.S. economic recovery remains on track despite a rise in coronavirus infections and flagged ongoing talks around the eventual withdrawal of monetary policy support.
However, bullion turned positive after Powell in a subsequent news conference said the rising cases of the Delta variant may weigh on a recovery in the labour market and that the central bank was still far away from considering raising interest rates.
Reinforcing Powell's views, data showed the U.S. economy grew at a 6.5% annualized rate last quarter, below a forecast for an 8.5% rise by economists in a poll.
Additionally, initial jobless claims declined by 24,000 to 400,000 vs. a forecast of 380,000 new claims in the week ended July 24, the government said.
The data was slightly weak but suggested that the Delta variant of the virus has not caused severe damage to the labour market.
Meanwhile, the personal consumption expenditures (PCE) price `index rose 0.4% in June after advancing 0.5% in May.
In the 12 months through June, the core PCE price index shot up 3.5%. The core PCE price index increased 3.4% year-on-year in May.
On the speculative side of things, COMEX gold speculators cut the net long positions by 3,004 contracts to 105,811, while COMEX silver speculators cut the net long positions by 5,059 contracts to 21,189 in the week to July 27.
The core personal consumer expenditure price index the Fed's favourite measure of inflation was higher than expected.
Higher number would be supportive for gold as it will be used as an inflation hedge.
Additionally, the Fed Chairman's dovish comments will continue to lend support to prices.
However, next week the major trigger point will come from the nonfarm payroll number.
In June, the U.S. economy added back jobs for a sixth straight month in June, with job growth picking up speed alongside the reopening economy.
Another addition will suggest that the economy is recovering and suggesting that the Delta variant may not impact the economic recovery in a significant way.
So, an upbeat number could keep upside limited in bullion.
On the charts, important resistance for LBMA spot gold is at $1830 levels and only a breakout above the level will push the markets to $1855 levels. However, a trade below the level will pull prices to $1815 levels. So, the pivotal level for next week is $1830 level. Range is $1815-$1850.
On the domestic front, important resistance zones for MCX August is at 48400-48500 levels and only a breakout above the zones will push the markets higher. However, a trade below the zone will pull prices to 48000-47800 support zones. Range is 47800-48000.
For Silver, LBMA Silver holds a resistance zone $25.80-$26.30 levels below which could see a downside move up to $24.40-$23.76 levels.
On the domestic front, MCX Silver September holds a resistance of 21-Weeks Moving Average which is placed at 68800 level below which could see some sideways momentum. However, it holds a strong support near 66700-65500 levels. Resistance is at 68800-70050 levels.
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