Commodity prices traded mixed on Thursday, continuing the trend from the previous session. On Wednesday, the bullion prices traded marginally down while base metals traded firm on weaker dollar and demand growth prospects. Crude oil prices rallied by nearly 5 per cent on bullish weekly inventory data and geopolitical risk. US Treasury yields rose on Wednesday while dollar index traded weak. Here is a look at how different commodities are behaving in today’s market.
Outlook: Bullion
Bullion prices traded higher with spot gold price at COMEX was trading near $1739 per ounce while spot silver price at COMEX was trading up near $25.43 per ounce in the morning trade. Bullion prices traded higher on dollar decline which fell to three week lows despite of some uptick in bond yields. The higher inflation concerns and worries over rising virus cases have supported buying in precious metals. We expect bullion prices to trade sideways to up for the day.
Trading Strategy:
MCX Gold June resistance for the day lies at Rs. 47100 per 10 grams with support at Rs. 46500 per 10 grams.
MCX Silver May support lies at Rs. 66500 per KG, resistance at Rs. 69500 per KG.
Outlook: Crude Oil
Crude oil prices traded steady with benchmark NYMEX WTI crude oil prices were trading near $63 per barrel in the morning trade. Crude oil prices rallied after EIA report showed larger than expected inventory draw and the weekly crude oil stockpiles fell by 5.89 mb as per the data. The higher demand from China and US following positive economic data has also boosted buying in crude oil. The chatter over Iran’s uranium enrichment may add some risk premium to the prices over geopolitical worries. We expect crude oil prices to trade sideways to up for the day.
Trading Strategy:
MCX Crude Oil April support lies at Rs. 4680 per barrel with resistance at Rs. 4780 per barrel.
Outlook: Base Metals
Base metals complex traded mixed as most of the metals traded firm on higher demand optimism. Copper prices traded higher gaining more than 2 per cent in previous trade while aluminium prices gained over lower supply concerns ahead of peak demand on China pollution curbs. Base metal prices are supported by weaker dollar and Fed comments over strong US economic recovery. Base metals are expected to trade sideways to up for the day.
Trading Strategy:
MCX Copper April support lies at Rs. 702 and resistance at Rs. 712.
MCX Zinc April support lies at Rs. 224, resistance at Rs. 230.
MCX Nickel April support lies at Rs. 1210 with resistance at Rs. 1240.
(Tapan Patel is Senior Analyst (Commodities) at HDFC Securities)
By Ravindra Rao
MCX Gold June futures again formed a bearish harami candlestick pattern. The low of the pattern near Rs 46350 is going to play a key support for the day. Below Rs 46350 levels could bring a corrective move in price towards Rs 46000. On the other hand, a move above Rs 46980 (high of the range) would push price higher towards the next key resistance of Rs 47500. The strength index (RSI) is now hovering near 61, suggesting firmness in trend. Hence for the day, price is expected to move in the band of Rs 46350-46980 with a sideways bias and close on either side of the range would bring further clarity in the trend.
Strategy:
Buy MCX Gold June at Rs 46550 with a target of Rs 46960 and a stop loss at Rs 46300.
MCX Silver May future witnessed good rebound from the support of Rs 65900 (midline of the Bollinger Band). On the intraday timeframe, price has formed a bullish flag. A breakout of the bullish flag would push price towards the key resistance of Rs 68580 (Higher Bollinger Band). A further move above would test the most likely target of Rs 69200. On the momentum front, RSI is hovering above the mid zone 50(55) suggesting sideways to higher trend. So for the day, price is expected to move in the band of Rs 66200-68580 with a sideways to positive bias. Only a close below Rs 65900 would change the trend to neutral.
Strategy:
Buy MCX Silver May at Rs 67100 with a target of Rs 68550 and a stop loss at Rs 65900.
(Ravindra Rao is VP-Head Commodity Research at Kotak Securities)
