Big week for bullion

Watch for indications from dollar and oil

Indian gold prices stayed almost flat last week at ₹26,890/10 gram, up from ₹26,880 (24 carat gold). While jewellers are keeping their fingers crossed, hoping for brisk Akshaya Tritiya sales on Tuesday, the market is quiet. The premium over global prices was $2/ounce, down from $3/ounce in the previous week. In the international market, gold closed marginally negative for the week despite the weakness in dollar.

Globally, US inflation data released on Friday showed that consumer prices increased for the second month in a row. This was viewed as negative for gold as a consistent increase in inflation means that it could hit the Fed’s target of 2 per cent, which will bring on a rate hike. The consumer price index increased by 0.2 per cent in March from a month earlier. Gold ended the week at $1,204.2/ounce, down 0.3 per cent from the previous week.

Other precious metals too ended in red. Silver closed at $16.3/ounce, lower by 1.2 per cent. Platinum closed at $1,171.5/ounce, down by a marginal 0.1 per cent. The US dollar index moved up on Friday after the inflation data.

However, it couldn’t recoup the losses made earlier in the week. The index closed at 97.45, down by 1.9 per cent. The dollar slipped for the week due to downbeat economic data.

Cues to watch

The coming week does not feature many key economic releases in the US (only new and existing home sales data), but the dollar and crude oil will be cues to watch for. Brent crude prices hit $64.95 on Thursday — a five-month high after news of a renewed crisis in Yemen. Higher oil prices are good for gold and a weak dollar is positive for oil. Overall, gold may test resistance at $1,209-1,212 this week. If this level is crossed, it can move up further. On the downside, supports are at $1,200 and $1,197.

Domestic market

Indian investors who want to buy gold purely as an investment on Akshaya Tritiya may consider gold exchange traded funds (ETFs), which may prove more cost-effective than gold ornaments. Wastage, making and other charges on jewellery tend to diminish returns on investment. Both the Bombay Stock and National Stock Exchange have announced extended trading hours (till 7 pm) in gold ETFs on Tuesday. The gold futures contract on MCX closed at ₹26,812, up by a marginal 0.12 per cent. MCX silver closed down at ₹36,455, down from ₹36,713 in the previous week.

MCX gold last week fell to its support at ₹26,500 and moved further down to a low of ₹26,387. However, since it inched up to close at around ₹26,800, it can climb to ₹27,000 this week. If resistance in the ₹27,000-27,100 region is broken, a move to ₹27,500 is feasible. On the downside, the first support is at ₹26,500 and then at ₹26,380-26,350. MCX silver has a strong support in the ₹35,900-36,000 zone. If this support is broken this week, the contract may slide to ₹33,491, the November 2014 low. On a move up, the first resistance is at ₹37,000 to a target of ₹37,200.

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