Commodity prices traded mixed on Thursday after witnessing a range bound trading on in the previous session as bullion prices continued upside move on Wednesday and crude oil prices traded lower on lower demand concerns and base metals traded firm on lower supply fears ended in green.
Outlook: Bullion
Bullion prices rallied with spot gold price at COMEX was trading above $1750 per ounce while spot silver price at COMEX was trading near $26.40 per ounce in the morning trade. Bullion prices rose after US FOMC meeting as US Fed chairman stayed with dovish stance, keeping bond buying program unchanged. The higher inflation fears boosted buying in precious metals despite of a rally in equity indices. The Fed signalled to keep interest rates near zero till 2023. We expect bullion prices to trade sideways to up for the day after witnessing initial correction.
Trading Strategy:
MCX Gold April resistance for the day lies at Rs. 45500 per 10 grams with support at Rs. 44900 per 10 grams.
MCX Silver May support lies at Rs. 66800 per KG, resistance at Rs. 69000 per KG.
Outlook: Crude oil
Crude oil prices continued to move downside as benchmark NYMEX WTI crude oil prices were trading 0.65% down at $64.18 per barrel in the morning trade. Crude oil prices declined for the fifth consecutive day with rise in official weekly inventory data. The EIA reported inventory build of 2.4 mb against a forecast of 1 mb decline. The stalled vaccinations in European nations and rising virus cases has raised concerns over fuel demand recovery for crude oil. Crude oil prices are expected to trade sideways to down for the day.
Trading Strategy:
MCX Crude Oil March support lies at Rs. 4610 per barrel with resistance at Rs. 4730 per barrel.
Outlook: Base metals
Base metals complex traded weak as most of the metals kept to lower trading range on MCX despite of a rally in Aluminium and Zinc prices in global market. Copper prices pared some previous gains as workers at Antofagasta mine at Chile agreed to review new wage offer under government mediation. Aluminum prices rallied to a two-year high at LME on higher demand and expectations for tightening supply. The expectations of China policy tightening and stalled vaccinations in European countries pressured base metals to trade weak. Base metals are expected to trade sideways to down for the day.
Trading Strategy:
MCX Copper March support lies at Rs. 669 and resistance at Rs. 676.
MCX Zinc March support lies at Rs. 215, resistance at Rs. 220.
MCX Nickel March support lies at Rs. 1140 with resistance at Rs. 1190.
(Tapan Patel is a Senior Analyst (Commodities) at HDFC Securities)
By Ravindra Rao
MCX Gold April future has breached the higher end of the downward sloping channel resistance near Rs 45150. Moreover the breakout of the regression channel also has strengthened the bull case. Immediate resistance for April futures exists around Rs 45500 (21 Day EMA), which could be the target for the day, followed by Rs 45700. On the downside, key support exist around Rs 44700, followed by Rs 44200. The reversal of strength index RSI (36) from the oversold zone has also supported the recovery in price. Furthermore positive divergence between price and the momentum indicator has reinforced the recovery. For the day, price is expected to move in the band of Rs 44700-45500 with positive bias. Only close above Rs 45500, would extend the gains further towards Rs 45700.
Strategy:
Buy MCX Gold April at Rs 45000 with a target of Rs 45500 and a stop loss at Rs 44700.
MCX Silver May future is hovering near the midline of the Bollinger Band(BB) at Rs 67950 and the key resistance of Rs 68100 (Top of Doji Candle). As noticed earlier, May future is oscillating in between the lower and mid band of the Bollinger band suggesting sideways trend. Immediate support for the price holds around Rs 65800 (78.6% Fibonacci retracement level) and Rs 65280 (Lower BB). On the momentum front, RSI is trading around 50(48) suggesting a sideways move. Price needs to sustain above Rs 68100 to change the bias to bullish, which would push price towards Rs 69400, followed by Rs 70200 (+2 SD of BB). On the other hand, failure to sustain above Rs 68100 would keep price in neutral zone.
Strategy:
Buy MCX Silver May at Rs 67500 with a target of Rs 69400 and a stop loss at Rs 66000.
(Ravindra Rao is VP-Head Commodity Research at Kotak Securities)
