Commodity prices traded higher on Wednesday, continuing the trend from the previous session. On Tuesday, bullion prices traded higher on dollar decline while base metals traded up on higher demand prospects. Crude oil prices recovered from previous losses on positive economic data. Here is a look at how different commodities are behaving in today’s market.
Outlook: Bullion
Bullion prices traded steady as spot gold price at COMEX was trading near $1739 per ounce while spot silver price at COMEX was trading flat near $25.09 per ounce in the morning trade. The precious metals rallied in the previous trade supported by dollar decline and ease in US bond yields. The dollar index fell to two weeks low, boosting buying in bullion on fading hopes for US policy tightening. We expect bullion prices to trade sideways to up for the day.
Trading Strategy:
Gold June resistance for the day lies at Rs. 46200 per 10 grams with support at Rs. 45800 per 10 grams.
MCX Silver May support lies at Rs. 64500 per KG, resistance at Rs. 67800 per KG.
Outlook: Crude Oil
Crude oil prices traded firm with benchmark NYMEX WTI crude oil price was trading half a percent up at $59.64 per barrel in the morning trade. Crude oil prices extended gains on Wednesday on fuel demand recovery hopes as global vaccine rollout widens. Crude oil prices are trading up ahead of official weekly oil inventory data after the API reported drawdown. The fall in dollar index boosted bargain buying in crude oil despite of higher supply from OPEC plus. We expect crude oil prices to trade sideways to up for the day.
Trading Strategy:
MCX Crude Oil April support lies at Rs. 4340 per barrel with resistance at Rs. 4480 per barrel.
Outlook: Base Metals
Base metals complex traded higher as most of the metals kept to upper trading range on stronger demand outlook and dollar decline. Base metals are getting support from positive equity indices on strong economic data while global vaccine rollouts has improved demand outlook. Copper prices traded strong on supply concerns after top mining nation Chile closed its borders while traders are also weighing rising inventory levels at Shanghai. Zinc and Nickel prices soared following run in steel prices on supply concerns. Base metals are expected to trade sideways to up for the day on positive global cues.
Trading Strategy:
MCX Copper April support lies at Rs. 682 and resistance at Rs. 695.
MCX Zinc April support lies at Rs. 221, resistance at Rs. 227.
MCX Nickel April support lies at Rs. 1220 with resistance at Rs. 1270.
(Tapan Patel is Senior Analyst (Commodities) at HDFC Securities)
By Ravindra Rao
MCX Gold June futures moved higher after breaching the key resistance of Rs 45700. Meanwhile, price has reached the 23.6 per cent Fibonacci retracement (45950) of the recent fall from Rs 51875 to Rs 44100. Moreover, the positive crossover of 5 and 21 day EMA has further strengthened the recovery in price. The strength index (RSI) is hovering near 58, suggesting firmness in trend. Key support for gold price exists around Rs 45500 and resistance exists around Rs 46150. A move above Rs 46150 would push the price further towards Rs 46600. For the day, price is expected to move in the band of Rs 45500-46140 with sideways to positive bias. Only close below Rs 45100 would change the trend to neutral.
Strategy:
Buy MCX Gold June at Rs 45600 with a target of Rs 46140 and a stop loss at Rs 45300.
MCX Silver May future also extended its gains and closed near the midline of the Bollinger band (65966). As noticed earlier, price held the support of the lower Bollinger band and trend line near Rs 63070 and witnessed sharp rebound. Now it has to sustain above the midline of the band at Rs 65966 to further strengthen its rally and move towards the next objective of Rs 67200 and Rs 68500. On the momentum front, RSI is trading around 50(49) suggesting a sideways trend. For the day, price is expected to move in the band of Rs 64400-66300 with sideways trend. Only a sustained move above Rs 65966-66200 zone would push price towards next key resistance of Rs 67200.
Strategy:
Buy MCX Silver May at Rs 64500 with a target of Rs 65950 and a stop loss at Rs 63200.
(Ravindra Rao is VP-Head Commodity Research at Kotak Securities)
