Gold and Crude Oil - 06 July 2023 - HDFC Securities

By Mr. Saumil Gandhi, Senior Analyst - Commodities, HDFC Securities.

Gold prices consolidated within a range on Thursday, with the gold price at Comex trading down by 0.09% at $1924 per ounce. Gold August future contract at MCX is trading marginally up by 0.05% at Rs 58495 per 10 grams.

Comex gold prices came under pressure following strength in US Treasury yields and the dollar index on the back of hawkish commentary from Federal Reserve officials' last meeting minutes. The minutes showed that a large majority of policymakers agreed that more tightening would likely be needed this year. The yield on policy-sensitive two-year Treasury bonds inched up to 4.97%, while the dollar index rose by 0.32% and closed at 103.73 in the previous session. A Higher interest rate is negative for non-yielding metals. In the domestic market, bullion is trading slightly higher as prices get support from a weaker Rupee, which has depreciated almost 0.60% against the US dollar so far this week.

We expect market players to adopt the sell-on-raise strategy in gold. Comex spot gold has immediate resistance at $1935/oz until the price trades below this resistance level; one should avoid buying while it has support at $1905/oz. MCX Gold August future has support at Rs 57980 and resistance at Rs 58850.

Crude oil prices edged higher on Thursday, with the benchmark NYMEX WTI crude oil trading up by 0.59% at $72.19 per barrel. Crude oil prices advance further as the market is now focused on supply-side constraints following production restrictions by Saudi Arabia and Russia and a larger-than-expected decline in U.S. crude inventory data from API. Meanwhile, reports from the OPEC seminar in Vienna, Saudi Arabia, suggested that the organisation will cooperate to maintain oil market balance and may resort to additional production cuts in the future in addition to extending the current restrictions.

We expect bullish momentum to continue in crude oil prices. NYMEX WTI crude oil has immediate resistance at $72.60; if price crosses this level, it will rally towards $73.65, the next resistance (100 DMA), and it has support at $70.40. MCX Crude Oil July contract has resistance at Rs 6080 and support at Rs 5820.