Commodity prices traded on an upbeat note on Tuesday after a mixed previous session where bullion and crude oil pared gains while base metals complex recovered in evening trade on demand recovery hopes. The dollar index rose by 0.37 per cent for the day to the highest since three and a half month. Here is a look at how different commodities are behaving in today’s market.
Outlook: Bullion
Bullion prices traded steady with spot gold prices at COMEX was trading near $1691 per ounce gaining half a percent while spot silver prices at COMEX was trading more than 1 per cent up at $25.43 per ounce in the morning trade. Bullion prices halted declines with progress on $1.9 trillion stimulus package. However, the precious metals are still under selling pressure due to firm bond yields and stronger dollar which may limit the upside for short term. We expect bullion prices to trade sideways to down for the day.
Trading Strategy:
MCX Gold April resistance for the day lies at Rs. 44600 per 10 grams with support at Rs. 44000 per 10 grams.
MCX Silver May support lies at Rs. 64500 per KG, resistance at Rs. 67500 per KG.
Outlook: Crude Oil
Crude oil prices resumed uptrend on Tuesday with benchmark NYMEX WTI crude oil prices were trading over half a percent up at $65.44 per barrel in the morning trade. Crude oil prices gained on fuel demand recovery hopes with progress on $1.9 trillion stimulus package and expectations of bullish weekly inventory data. Eased tensions in Middle East after the recent attack on Saudi oil facilities have dragged oil prices down from recent highs. Crude oil prices are expected to trade sideways to up for the day with positive global cues.
Trading Strategy:
MCX Crude Oil March support lies at Rs. 4730 per barrel with resistance at Rs. 4870 per barrel.
Outlook: Base Metals
Base metals complex traded mixed on Tuesday with Copper prices traded with marginal gains while rest of the metals were trading flat in the opening trade. Copper prices resumed upside on growing demand optimism with US stimulus and strong China export data. Base metals were trading under pressure on stronger dollar index while downside was limited on improved demand outlook. The $1.9 trillion stimulus package is expected to pass through the House on Tuesday. Base metals are expected to trade sideways to up for the day.
Trading Strategy:
MCX Copper March support lies at Rs. 689 and resistance at Rs. 702.
MCX Zinc March support lies at Rs. 216, resistance at Rs. 221.
MCX Nickel March support lies at Rs. 1160 with resistance at Rs. 1220.
(Tapan Patel is a Senior Analyst (Commodities) at HDFC Securities)
By Ravindra Rao
MCX Gold April future failed to hold its earlier gains and witnessed weakness in trend. Meanwhile price is trading in an intermediate downward sloping channel after sliding below the long term trend line support near Rs 45200. The negative crossover of 5(44800) and 21(46120) day EMA also kept a check on the recovery in price trend. On the downside, key support holds around Rs 43900, followed by Rs 43600. The strength index RSI is hovering in the oversold zone (25.6) indicating limited downside in gold prices. Going by the above analysis, price is expected to move in the band of Rs 43900-44800 with sideways to downside bias. Only close below Rs 43900, would extend the weakness towards 43600.
Strategy:
Sell MCX Gold April at Rs 44500 with a target of Rs 43900 and a stop loss at Rs 44800.
MCX Silver May future remained in a range after breaching the lower band of the consolidation range Rs 66400-69400. Meanwhile price is trading below the negative crossover of 5 (66580) and 21 (67935) day EMA and it has also breached the rising trend line support. On the momentum fort, RSI is trading below 50 (42) suggesting weakness in trend. Most of the technical factors suggest weakness in price. Hence for the day price is expected to move in the range of Rs 64700-66580 with a sideways to downside bias. However, only a sustained move above Rs 66580 would extend the upside towards the next key resistance of Rs 67935.
Strategy:
Sell MCX Silver May at Rs 66400 with a target of Rs 64800 and a stop loss at Rs 67400.
(Ravindra Rao is VP-Head Commodity Research at Kotak Securities)
