Commodities traded on an upbeat note on Monday taking cues from a strong global trend. Commodities continued Friday’s momentum after they ended higher in the previous session as bullion prices witnessed strong recovery while base metals and crude oil continued gains on demand growth prospects. Here is a look at how different commodities are behaving in today’s market.
Outlook: Bullion
Bullion prices traded steady with spot gold price at COMEX was trading near $1,810 per ounce while spot silver price at COMEX was trading at $26.93 per ounce with marginal gains in the morning trade. Bullion prices traded up from the support levels on disappointing US payroll data and stimulus hopes. However, continuous dollar strengthening has capped the upside in precious metals. We expect bullion prices to trade sideways to down for the day.
Trading Strategy:
MCX Gold April resistance for the day lies at Rs. 47,500 per 10 grams with support at Rs. 46,900 per 10 grams.
MCX Silver March support lies at Rs. 67,000 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 over 1 percent up to $57.44 per barrel on Monday. Crude oil prices continued upside move after rallying nearly 9% in the previous week. Hopes of fuel demand recovery on US stimulus expectations boosted crude oil prices. 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 upwards for the day on positive global cues.
Trading Strategy:
MCX Crude Oil February support lies at Rs. 4,130 per barrel with resistance at Rs. 4,250 per barrel.
Outlook: Base Metals
Base metals complex traded mixed with Copper and Nickel headed with marginal gains while Zinc and Lead prices were trading under pressure on Monday. Base metals prices are trading muted on slower manufacturing activities in China ahead of Lunar day holidays. Copper prices are supported by supply crunch fears and demand growth optimism over global vaccine rollouts. Base metals are capped upside due to gains in weekly inventories at SHFE. Base metals are expected to trade sideways to up for the day.
Trading Strategy:
MCX Copper February support lies at Rs. 607 and resistance at Rs. 615.
MCX Zinc February support lies at Rs. 208, resistance at Rs. 214.
MCX Nickel February support lies at Rs. 1,290 with resistance at Rs. 1,340.
(Tapan Patel is Senior Analyst (Commodities) at HDFC Securities)
By Ravindra Rao
MCX Gold April future witnessed good recovery as it held the support of the lower band of the Bollinger band (-2SD). Meanwhile, price is trading below the 5 day EMA(47,600) which could be the initial hurdle for the day. Similarly, Rs 46,600 is the key support level. The recovery in Gold futures got support from the reversal in RSI. The strength index has moved above 30 after testing the oversold zone of 20, which suggests towards a recovery phase in gold. Going by the above analysis, price is expected to move in the band of Rs 46,600-47,600 with sideways to positive bias. Only close below Rs 46,600 would weaken the recovery.
Strategy:
Buy MCX Gold April at Rs 46,900 with a target of Rs 47,600 and a stop loss at Rs 46,600.
MCX Silver March futures followed the path of gold and witnessed strong rebound from the support of 50 DAY EMA (66,530). Price also held the lower band of the upward sloping channel near Rs 66,200. Meanwhile, price has moved above the 21 day EMA (67,700), which could be the key support for the day and any dip towards the same might attract buying. On the upside, key resistance exists around Rs 70,400, followed by Rs 71,300. On the momentum front, RSI has moved above the midline (53) suggesting sideways trend. However, it needs to sustain above to rebuild the strength. For the day, price is expected to move in the range of Rs 66,550-70,400 with a sideways to positive trend. Only a close below Rs 65,050 would reverse the trend to neutral.
Strategy:
Buy MCX Silver March at Rs 67,700 with a target of Rs 70,200 and a stop loss at Rs 66,500.
(Ravindra Rao is VP-Head Commodity Research at Kotak Securities)
