Commodity prices traded higher during the week passed by with bullion prices reported first weekly gain after losing for two weeks. Crude oil prices pared weekly losses on geopolitical tensions on Iran while base metals gained on demand growth optimism. The dollar index ended 0.62 per cent down for the week. 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 $1,822 per ounce while spot silver prices at COMEX was trading firm near $27.47 per ounce in the morning trade. Bullion prices capped the upside on dollar recovery on Friday and strong Asian equity indices. The US stimulus hopes and spark in Middle East tensions may support gold prices to limit the downside. The traders and investors are awaiting for fresh triggers to get bullish momentum in the precious metals. We expect bullion prices to trade sideways for the day as US markets are closed on account of Presidential Holiday.
Trading Strategy:
MCX Gold April resistance for the day lies at Rs. 47,600 per 10 grams with support at Rs. 47,100 per 10 grams.
MCX Silver March support lies at Rs. 68,000 per KG, resistance at Rs. 71,000 per KG.
Outlook: Crude Oil
Crude oil prices rallied on Monday with benchmark NYMEX WTI crude oil prices rose by more than 2 per cent to $60.83 per barrel in the morning trade. Crude oil prices soared on Middle East tensions after the Saudi-led coalition fighting in Yemen said late on Sunday it intercepted and destroyed an explosive-laden drone fired by the Iran-aligned Houthi group toward the kingdom. Crude oil prices are expected to trade up for the day.
Trading Strategy:
MCX Crude Oil February support lies at Rs. 4,460 per barrel with resistance at Rs. 4,370 per barrel.
Outlook: Base Metals
Base metals complex traded higher with Copper, Nickel and Zinc prices rallied by more than 1 per cent on Monday. Base metals traded strong on demand growth optimism and supply crunch in global tin markets. The rally in equity indices are also fuelling the bullish bets in base metals over strong economic recovery. Base metals are expected to trade sideways to up for the day.
Trading Strategy:
MCX Copper February support lies at Rs. 643 and resistance at Rs. 652.
MCX Zinc February support lies at Rs. 223, resistance at Rs. 230.
MCX Nickel February support lies at Rs. 1,320 with resistance at Rs. 1,380.
(Tapan Patel is a Senior Analyst (Commodities) at HDFC Securities)
By Ravindra Rao
MCX Gold April future moved towards the key supports of Rs 46,960 (78.6 per cent Fibonacci level) but witnessed rebound to the immediate resistance of 5 DEMA (47,460) during the end of the trading session. Meanwhile, price is still moving inside the downward sloping channel with channel resistance near Rs 48,000. So price needs to sustain above the channel resistance to turn bullish. On the momentum front, RSI is hovering around 40. Going by the above analysis price is expected to move in the band of Rs 46,960-48,000 with sideways bias. Only close below Rs 46,960 would weaken the recovery.
Strategy:
Buy MCX Gold April at Rs 47,150 with a target of Rs 47,850 and a stop loss at Rs 46,900.
MCX Silver March future witnessed good rebound as it held the key support of 21 day EMA at Rs 68,220. Meanwhile price is hovering above the bullish crossover of 5 and 21 day EMA which has supported the recovery in price. In broader terms price is still hovering inside the rising channel with RSI at 53 suggesting sideways to bullish bias. However it needs to sustain above to rebuild the strength. Below Rs 68,220, next key support exists around Rs 66,950 (50 DEMA and lower band of the upward channel coincides near the same zone). However on the upside, key resistance exists around Rs 70,760, followed by Rs 71,330. For the day, price is expected to move in the range of Rs 68,200-70,760 with a positive bias. Only a close below Rs 68,200 would extend downside towards the next key support at Rs 66,950.
Strategy:
Buy MCX Silver March at Rs 68,960 with a target of Rs 70,750 and a stop loss at Rs 68,000.
(Ravindra Rao is VP-Head Commodity Research at Kotak Securities)
