Commodity prices traded mixed on Monday after trading upbeat during the week gone by. The previous week, most of the commodities in non-agro segment witnessed strong buying on weaker dollar. Bullion prices gained amid inflation hedge while base metals rallied on lower supply and higher demand outlook. Here is a look at how different commodities are behaving in today’s market.
Outlook: Bullion
Bullion prices traded firm with spot gold price at COMEX was trading near $1778 per ounce while spot silver price at COMEX was trading marginally down at $25.78 per ounce in the morning trade. Bullion prices rallied on weaker dollar and a fall in US bond yields. Investors’ appetite for a hedge against inflation also triggered buying in precious metals despite of a positive economic data from US. Bullion prices also gained on pandemic worries with rising cases and partial lockdown in India and Brazil along with Europe. We expect bullion prices to trade higher for the day.
Trading Strategy:
MCX Gold June resistance for the day lies at Rs. 47800 per 10 grams with support at Rs. 47200 per 10 grams.
MCX Silver May support lies at Rs. 67200 per KG, resistance at Rs. 69500 per KG.
Outlook: Crude Oil
Crude oil prices traded weak with benchmark NYMEX WTI crude oil price was trading 0.25% down to $63.03 per barrel in the morning trade. Crude oil prices traded lower on Monday on worries over fuel demand recovery amid rising virus cases. The travel restrictions from Hong Kong to flights from India, Pakistan and Philippines has pressured oil prices to trade weak. Crude oil demand is hit by partial lockdown in India and Brazil while Japan is on the verge of fourth wave of virus infections. We expect crude oil prices to trade sideways to down for the day.
Trading Strategy:
MCX Crude Oil May support lies at Rs. 4680 per barrel with resistance at Rs. 4780 per barrel.
Outlook: Base Metals
Base metals complex traded higher with most of the metals traded firm on higher demand optimism. Base metals are trading higher with round of positive economic data from US and China which has boosted demand outlook for industrial metals. The lower supply concerns from China has spurred buying in Aluminium and Zinc. Copper prices extended gains on weaker dollar and positive equity indices. Base metals are expected to trade sideways to up for the day.
Trading Strategy:
MCX Copper April support lies at Rs. 712 and resistance at Rs. 720.
MCX Zinc April support lies at Rs. 227, resistance at Rs. 231.
MCX Nickel April support lies at Rs. 1190 with resistance at Rs. 1260.
(Tapan Patel is Senior Analyst (Commodities) at HDFC Securities)
By Ravindra Rao
MCX Gold June futures have breached and sustained above the higher end of the 5 day consolidation range Rs 46250-47033. A complex inverse head and shoulder pattern was in the formation which got confirmed last week with the break of the neckline resistance near Rs 47080. The right shoulder support is pegged at Rs 46300 which would be the short term reversal point. The next hurdle is placed near Rs 47500 a close above might push the price higher till Rs 48000. A negative divergence in the RSI is indicating possibility of a corrective move which might attract buying. To conclude any dips towards Rs 47000-46900 would attract buying for an initial target of Rs 47500 and then Rs 48000. Immediate support would be Rs 46700 below which the bullish edge might slightly fade.
Strategy:
Buy MCX Gold June at Rs 47000 with a target of Rs 47550 and a stop loss at Rs 46700.
MCX Silver May futures have also moved higher following the yellow metal, gold. An inverse head and shoulder formation is also seen in silver. The neckline resistance near Rs 67800 has been penetrated and the price is sustainably trading above the same. Having said that support zone is pegged near Rs 67800-67700 which has now become the demand zone. Strong short term support is near Rs 66000 below which the inverse Head and shoulder pattern might negate. Resistance is pegged near Rs 69500 and above that Rs 71200 would act as the hurdle. A negative divergence is RSI is indicating some profit booking which might attract buying. Going by the above analysis the demand zone is near Rs 67700-67800 and the upside might initially extend till Rs 69500.
Strategy:
Buy MCX Silver May at Rs 67900 with a target of Rs 69500 and a stop loss at Rs 67400.
(Ravindra Rao, CMT, EPAT is VP-Head Commodity Research at Kotak Securities)
