Commodity prices traded higher on Monday, continuing the trend from the previous week. During the week passed by, bullion prices witnessed the best week of the last six months. Crude oil prices reported second weekly gain with broad buying in commodities. Base metals extended gains as Copper and Aluminium prices rose the most, boosted by strong demand outlook and lower supply concerns. Here is a look at how different commodities are behaving in today’s market.
Outlook: Bullion
Bullion prices traded higher with spot gold prices at COMEX were trading near $1834 per ounce while spot silver prices at COMEX were trading nearly 1 per cent up at $27.70 per ounce in the morning trade. Gold prices rallied after US reported disappointing job numbers as US unemployment rate rose by 6.1 per cent in April. Gold prices traded higher on weaker dollar and fall in US bond yields. The dovish Fed stance and inflation worries may keep gold prices up in the near term. We expect bullion prices to trade higher for the day.
Trading Strategy:
Gold June resistance for the day lies at Rs. 48000 per 10 grams with support at Rs. 47600 per 10 grams.
MCX Silver May support lies at Rs. 71200 per KG, resistance at Rs. 74000 per KG.
Outlook: Crude Oil
Crude oil prices traded higher with benchmark NYMEX WTI crude oil prices were half a percent up to $65.23 per barrel in the morning trade. Crude oil prices rose on Monday over pipeline disruption due to a cyber-attack. Colonial Pipeline Co., a key supplier of gasoline, diesel and jet fuel to the eastern half of the U.S., halted operations pushing oil product prices higher. The weaker dollar also boosted buying in crude oil along with broad buying in commodities. We expect crude oil prices to trade higher for the day.
Trading Strategy:
MCX Crude Oil May support lies at Rs. 4730 per barrel with resistance at Rs. 4870 per barrel.
Outlook: Base Metals
Base metals prices extended gains as most of the metals rallied in Monday’s opening trade following strong cues from mining sector. The rally in iron ore prices was followed by Copper, Zinc and Aluminium prices over strong demand outlook. The weaker dollar and China-Australia trade tensions has added fuel to the base metals rally. Global vaccine rollouts and ease of lockdown measures in Europe and UK has improved investment sentiments. Base metals are expected to trade higher for the day.
Trading Strategy:
MCX Copper May support lies at Rs. 790 and resistance at Rs. 810.
MCX Zinc May support lies at Rs. 236, resistance at Rs. 242.
MCX Nickel May support lies at Rs. 1290 with resistance at Rs. 1370.
(Tapan Patel is Senior Analyst (Commodities) at HDFC Securities)
By Ravindra Rao
MCX Gold June futures witnessed a sharp rally towards the key resistance of Rs. 48000 as it breached the higher band of the consolidation range at Rs. 47450. For the day, price trend seems to be on higher side as weaker US job numbers has also strengthened the bullish bias. On the resistance front, Rs. 48400 holds key level for the day. Similarly on the downside, Rs. 47450 and Rs. 47200 holds key supports. RSI is hovering near 60 suggesting bullishness in the trend. Hence, any dip towards the supports would attract buying and push price towards the objective of Rs. 48400. Only a move above Rs. 48400 would extend the rally.
Strategy:
Buy MCX Gold June at Rs. 47650 with a target price of Rs. 48400 and a stop loss at Rs. 47200.
MCX Silver May futures have breached the multiple resistance zone of Rs. 71200 – 71300 and witnessed sharp rally towards Rs. 72000. Price is trading above the 5 and 20 DMA which is a bullish indication. Support for the day is at Rs. 70800 followed by Rs. 70400. Similarly, resistance is seen near Rs. 72850 and Rs. 73800. Momentum oscillator RSI is trading near 64 which is giving bulls the edge. Dips might attract buying for the day until Rs. 70400 holds. Profit objective would be Rs. 72850 and then Rs. 73800.
Strategy:
Buy MCX Silver May at Rs. 71000 with a target price of Rs. 72850 and a stop loss at Rs. 70300.
(Ravindra Rao, CMT, EPAT is VP-Head Commodity Research at Kotak Securities)
