Commodity prices traded with cuts on Friday after trading firm in the previous session. On Thursday, bullion prices continued a short recovery while base metals witnessed some buying. Crude oil prices ended higher on demand growth optimism. Here is a look at how different commodities are behaving in today’s market.
Outlook: Bullion
Bullion prices traded marginally down with spot gold price at COMEX was trading near $1718 per ounce while spot silver price at COMEX was trading half a percent down at $25.97 per ounce in the morning trade. Bullion prices witnessed recovery on softening of bond yields and weaker dollar. The higher inflation fears drew the investors out of dollar to 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 45100 per 10 grams with support at Rs 44500 per 10 grams.
MCX Silver May support lies at Rs.65000 per KG, resistance at Rs 68500 per KG.
Outlook: Crude Oil
Crude oil prices traded lower with benchmark NYMEX WTI crude oil prices were trading 0.23% down at $65.85 per barrel in the morning trade. Crude oil prices pared some previous gains on stronger dollar. Crude oil prices were up on fuel demand recovery hopes on US stimulus package. Crude oil prices are expected to trade sideways to down for the day.
Trading Strategy:
MCX Crude Oil March support lies at Rs. 4720 per barrel with resistance at Rs. 4860 per barrel.
Outlook: Base Metals
Base metals complex traded down on Friday with most of the metals pared previous gains on China demand concerns and stronger dollar. Copper prices maybe limited on the downside on supply crunch fears. Base metals are capped upside despite of positive global cues on policy tightening in China which may hurt demand growth. Base metals are expected to trade sideways to down for the day.
Trading Strategy:
MCX Copper March support lies at Rs 670 and resistance at Rs 685.
MCX Zinc March support lies at Rs 213, resistance at Rs 221.
MCX Nickel March support lies at Rs 1150 with resistance at Rs 1190.
(Tapan Patel is a Senior Analyst (Commodities) at HDFC Securities)
By Ravindra Rao
MCX Gold April future has extended its rebound as prices moved above the 5 day EMA at Rs 44810. Moreover, an intermediate regression channel breakout has also strengthened the rally in gold. From short term perspective, key resistance for gold April future exists around Rs 45800 (21 Day EMA) and key support holds around Rs 44100. The strength index RSI has rebounded from the oversold zone to currently near 35. Positive divergence between RSI and price has also strengthened the recovery in price. However, it needs to sustain above 30 to rebuild the momentum in price recovery. Going by the above analysis, price is expected to move in the band of Rs 44200-45200 with sideways to positive bias. Only close above Rs 45200, would extend its gains further towards Rs 45800.
Strategy:
Buy MCX Gold April at Rs 44500 with a target of Rs 45150 and a stop loss at Rs 44100.
MCX Silver May future has retraced 50% of the recent fall from Rs 70700 to Rs 64880 in this week. Meanwhile, key resistance for May future exists around Rs 68560 (61.8% Fibonacci level), which also coincides with the higher band of the intermediate downward channel. On the downside Rs 65800 and Rs 64800 holds major supports in the coming sessions. On the momentum front, RSI is trading around 50(48) suggesting sideways bias. Hence for the day, price is expected to move in the range of Rs 65800-68560 with sideways bias. Only a sustained move out of the range could bring more clarity on the direction in Silver prices.
Strategy:
Buy MCX Silver May at Rs 65800 with a target of Rs 68200 and a stop loss at Rs 64800.
(Ravindra Rao is VP-Head Commodity Research at Kotak Securities)
