Commodity prices traded lower with most of the commodities in the non-agro segment witnessed selling except crude oil. Crude oil futures rallied to the highest levels in a year on demand growth optimism. Bullion prices declined on stronger dollar and positive economic data from US, while base metals witnessed muted trading ahead of Chinese holidays. The dollar index ended up by 0.39 per cent for the day. 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 $1,798 per ounce while spot silver price at COMEX was trading at $26.36 per ounce in the morning trade. Bullion prices halted declines near the support levels as value investors may see a good opportunity to enter long. Earlier, bullion prices witnessed selling on rise in bond yields and dollar strength over positive economic data. The traders and investors are looking forward for US Non-Farm payroll data to be released in the evening. We expect bullion prices to trade sideways to down for the day.
Trading Strategy:
MCX Gold April resistance for the day lies at Rs. 47,200 per 10 grams with support at Rs. 46,500 per 10 grams.
MCX Silver March support lies at Rs. 65,800 per KG, resistance at Rs. 69,500 per KG.
Outlook: Crude Oil
Crude oil prices traded higher with benchmark NYMEX WTI crude oil prices were trading nearly 1 percent up to $56.73 per barrel on Friday. Crude oil prices traded near the highest levels since January 22 of last year on fuel demand recovery hopes backed by strong economic data and vaccine rollouts. The lower supply with output cuts from OPEC plus and weekly drawdowns in US inventories has also supported crude oil prices to trade higher. Crude oil prices are expected to trade for the day on positive global cues.
Trading Strategy:
MCX Crude Oil February support lies at Rs. 4,090 per barrel with resistance at Rs. 4,180 per barrel.
Outlook: Base Metals
Base metals complex traded higher as Nickel, Zinc and Copper prices were trading with over half a percent gains on Friday backed by positive economic data from the US. Zinc prices was supported by fears of tightening supply of iron ore in China. The slower pace of economic recovery and Chinese Lunar day holidays may limit the upside in base metals till mid-February. Base metals are expected to trade sideways to up for the day.
Trading Strategy:
MCX Copper February support lies at Rs. 597 and resistance at Rs. 605.
MCX Zinc February support lies at Rs. 208, resistance at Rs. 213.
MCX Nickel February support lies at Rs. 1,270 with resistance at Rs. 1,320.
(Tapan Patel is a Senior Analyst (Commodities) at HDFC Securities)
By Ravindra Rao
MCX Gold April future has breached the key support of Rs 47,250 (50 per cent Fibonacci level) as it failed to move above the 5 day EMA of Rs 47,770. The negative crossover of 5 and 21 day EMA kept a check on the upside in prices. Moreover, weakness in the strength index RSI (22) also led price to slide below the key support. However, the oversold condition in gold could anytime trigger profit taking. Meanwhile, support for April gold futures exists around Rs 46,200-46,100 zone (Trend Line), which could be the key support in the short term. Only failure to hold would change the trend to neutral. So for the day price is expected to trade in the broad range of Rs 46,200-47,250 with a sideways bias. Only a sustained move above Rs 47,770 would bring fresh buying interest in the metal.
Strategy:
Sell MCX Gold April at Rs 47,200 with a target of Rs 46,500 and a stop loss at Rs 47,600.
MCX Silver March futures weakened further as it has breached the 21 and 5 day EMA supports at Rs 67,700 and Rs 68,200 respectively. Meanwhile, price is still trading in the broad rising trend channel with lower bound support near Rs 66,200, followed by Rs 65,050 (Recent Bottom). On the other hand, key resistance exists around Rs 68,200 and Rs 69,400. On the momentum front, RSI has moved below the midline (46) after hitting the overbought zone. This suggests the price to go further under consolidation. So for the day, price is expected to move in the range of Rs 66,200-68,200 with a sideways trend. Only a close below Rs 65,050 would reverse the trend to neutral.
Strategy:
Sell MCX Silver March at Rs 67,600 with a target of Rs 66,200 and a stop loss of Rs 68,400.
(Ravindra Rao is VP-Head Commodity Research at Kotak Securities)
