Commodity strategies: Gold, silver, crude, base metals
By Tapan Patel
Commodity prices traded mixed on Friday, continuing the trend from the previous session. On Thursday, bullion prices traded firm with gold outperforming silver. Base metal prices traded under pressure continuing the downtrend on global inflation worries. Crude oil prices fell by more than 2 per cent on Iran nuclear talks and weaker demand from Asia. The dollar index fell by 0.42 per cent which supported bullion to end in green. Here is a look at how different commodities are behaving in today’s market.
Outlook: Bullion
Bullion prices traded firm on Friday with spot gold price at COMEX was trading near $1876 per ounce while spot silver price at COMEX was trading flat at $27.74 per ounce in the morning trade. Precious metals shed some previous gains on profit booking while gold is heading for its third weekly gain. The higher inflation worries from major central banks has raised speculation over hawkish Fed stance triggering some correction in precious metals. We expect bullion prices to trade sideways to up for the day.
Trading Strategy:
MCX Gold June resistance for the day lies at Rs. 48900 per 10 grams with support at Rs. 48100 per 10 grams.
MCX Silver May support lies at Rs. 70200 per KG, resistance at Rs. 74000 per KG.
Outlook: Crude Oil
Crude oil prices traded firm with benchmark NYMEX WTI crude oil price was trading 0.47 per cent up near $62.23 per barrel in the morning trade. Crude oil prices pared some of previous losses on Friday but prices are set to report biggest weekly loss since March. Crude oil prices witnessed sell off on higher inflation worries and deemed demand outlook due to rising virus cases in Asia. Crude oil prices are trading lower as traders and investor are weighing progress over Iran nuclear talks. We expect crude oil prices to trade sideways to down for the day.
Trading Strategy:
MCX Crude Oil June support lies at Rs. 4520 per barrel with resistance at Rs. 4650 per barrel.
Outlook: Base Metals
Base metals prices traded lower with most of the metals extended decline on Friday. Base metals traded weak in the opening trade with selling in Shanghai metals on speculation over China policy action to curb rising inflation. The inflation warnings from major central banks has lowered investment sentiments on expectation that central banks will ease stimulus measures. Base metals are expected to trade sideways to down for the day.
Trading Strategy:
MCX Copper May support lies at Rs. 742 and resistance at Rs. 755.
MCX Zinc May support lies at Rs. 229, resistance at Rs. 234.
MCX Nickel May support lies at Rs. 1210 with resistance at Rs. 1270.
(Tapan Patel is Senior Analyst (Commodities) at HDFC Securities)
By Ravindra Rao
MCX Gold June futures remained in the range of Rs 48150-48900 after a highly volatile session. The lower band of the range got support from 8 day EMA (48150). The next support for gold price exists around Rs 47900. Similarly, the higher Bollinger band acts as key resistance for price. Now price has to move beyond Rs 48900-48950 (61.8 per cent Fibonacci retracement of the previous fall), to resume its uptrend and towards Rs 49250. The strength index is hovering around 64 suggesting firmness in the trend. So for the day, price is expected to move in the range of Rs 48150-48900 with a sideways bias. Only a sustained move above Rs 48950 would bring additional buying interest and push prices further towards Rs 49250.
Strategy:
Buy MCX Gold June at Rs 48150 with a target price of Rs 48800 and a stop loss at Rs 47800.
MCX Silver May futures continued to move in a range after a few extreme volatile sessions. The key resistance for July future exists around Rs 73300, followed by Rs 74450 (Previous Top). Similarly, strong support holds around Rs 71200, followed by Rs 70550 (20 day EMA). The bullish trend channel is intact, along with bullish crossover of 8 and 20 day EMA which helped prices to erase its losses. Momentum oscillator RSI is hovering near 60, which supports the bull case. However, price has to breach the previous top and key resistance of Rs 74450 to regain its momentum. To conclude, we expect silver to trade in the range of Rs 70550-73300 with a sideways bias.
Strategy:
Trading Range for MCX Silver is Rs 70550-73300.
(Ravindra Rao, CMT, EPATVP-Head Commodity Research is Kotak Securities)