Commodity prices traded on an upbeat note on Thursday, continuing the steady trend from the previous session. On Wednesday, with bullion prices saw a choppy trade, keeping to a narrow trading range. Base metals gained on stronger demand and dollar decline while crude oil futures traded under pressure post inventory 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 $1740 per ounce while spot silver price at COMEX was trading flat near $25.10 per ounce in the morning trade. The precious metals kept to muted trading as traders and investors tracked dollar and bond yields over Fed minutes of meeting. The Fed minutes showed that the central bank is committed to its ultra-low interest rates policy tracking US economic recovery. We expect bullion prices to trade sideways to up for the day.
Trading Strategy:
MCX Gold June resistance for the day lies at Rs. 46600 per 10 grams with support at Rs. 45900 per 10 grams.
MCX Silver May support lies at Rs. 65800 per KG, resistance at Rs. 67800 per KG.
Outlook: Crude Oil
Crude oil prices traded lower with benchmark NYMEX WTI crude oil price was trading half a percent down to $59.41 per barrel in the morning trade. Crude oil prices witnessed selling after an unexpected rise in US gasoline inventories despite of a drawdown in crude oil inventories. The EIA data showed that weekly gasoline stockpile rose by 4.04 mb against a forecast of 0.21 mb draw. The weaker demand and ample supply has capped the upside in oil prices. We expect crude oil prices to trade sideways to down 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 firm as most of the metals kept to positive trading on demand growth optimism and weaker dollar. The boost in equity indices also supported base metals to trade higher post FOMC minutes. Base metals are getting support from strong economic data while global vaccine rollouts has improved demand outlook. The surge in steel demand is boosting buying in Zinc and Nickel, while copper prices are supported by supply fears from Chile despite of a surge in inventories. 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. 687 and resistance at Rs. 698.
MCX Zinc April support lies at Rs. 223, resistance at Rs. 230.
MCX Nickel April support lies at Rs. 1240 with resistance at Rs. 1290.
(Tapan Patel is Senior Analyst (Commodities) at HDFC Securities)
By Ravindra Rao
MCX Gold June futures have rallied further after breaching the immediate resistance of Rs 46140. Earlier, price had formed a bullish double bottom pattern, so according to this pattern the ideal target price would be Rs 46645. Meanwhile, the positive crossover of 5 and 21 day EMA has further strengthened the recovery rally in gold price.
Positive divergence between RSI and price has reinforced the rally. The strength index (RSI) is now hovering near 63, suggesting firmness in trend. Hence for the day, price is expected to move in the band of Rs 45700-46640 with a sideways to positive bias.
Strategy
Buy MCX Gold June at Rs 46100 with a target of Rs 46640 and a stop loss at Rs 45700.
MCX Silver May futures also followed the path of gold and moved higher after breaching the midline of the Bollinger band (65960). Meanwhile, price is trading in a downward sloping channel with channel resistance near Rs 67000-67200. Price needs to breach the trend line resistance to extend its gain further towards Rs 68200. The rebound in the momentum indicator (RSI) has strengthened the rebound in price.
On the downside, immediate support holds around Rs 65950, followed by Rs 64900. So for the day, price is expected to move in the band of Rs 64900-67200 with a sideways to higher trend. Only a sustained move above Rs 67200 would extend the upside towards next key resistance of Rs 68200.
Strategy
Buy MCX Silver May at Rs 65750 with a target of Rs 67200 and a stop loss at Rs 64900.
(Ravindra Rao is VP-Head Commodity Research at Kotak Securities)
