Commodity prices traded mixed on Thursday, after trading volatile in the previous session. On Wednesday, gold prices rallied to four-month highs while silver prices declined following weak base metals. Base metals and crude oil futures witnessed heavy sell off with plunge in crypto currencies and rising inflation concerns. The dollar index traded higher gaining 0.49 per cent for the day pressuring commodities. Here is a look at how different commodities are behaving in today’s market.
Outlook: Bullion
Bullion prices traded firm on Thursday with spot gold price at COMEX was trading near $1877 per ounce while spot silver price at COMEX was trading marginally up at $27.74 per ounce in the morning trade. The precious metals traded higher as crash in crypto currencies and Fed minutes speculation boosted buying in safe haven asset. Major central banks have flagged worries over higher inflation which may support bullion prices to trade firm. We expect bullion prices to trade sideways to up for the day.
Trading Strategy:
MCX Gold June resistance for the day lies at Rs 49000 per 10 grams with support at Rs 48200 per 10 grams.
MCX Silver May support lies at Rs 70800 per KG, resistance at Rs 74000 per KG.
Outlook: Crude Oil
Crude oil prices traded firm with benchmark NYMEX WTI crude oil prices were trading marginally up near $63.48 per barrel in the morning trade. Crude oil prices are trading under pressure on progress over Iran nuclear talks. Crude oil prices also declined on mounting worries over higher inflation and rising virus cases in other Asian countries apart from India. Crude inventories increased by 1.3 mb last week as per data published by US EIA. We expect crude oil prices to trade sideways to down for the day.
Trading Strategy:
MCX Crude Oil June support lies at Rs. 4620 per barrel with resistance at Rs. 4760 per barrel.
Outlook: Base Metals
Base metals prices traded lower with most of the metals continued downside move on Thursday. Base metals extended fall on speculation over China policy action to curb rising inflation. China said it would strengthen its management of commodity supply and demand to curb “unreasonable” increases in prices. The stronger dollar with selling in equity indices and crypto currencies also pressured base metals to trade weak. Base metals are expected to trade sideways to down for the day.
Trading Strategy:
MCX Copper May support lies at Rs. 754 and resistance at Rs. 768.
MCX Zinc May support lies at Rs. 227, resistance at Rs. 234.
MCX Nickel May support lies at Rs. 1240 with resistance at Rs. 1320.
(Tapan Patel is Senior Analyst (Commodities) at HDFC Securities)
By Ravindra Rao
MCX Gold June futures moved in a wide range before the outcome of FOMC meeting minutes. Price held the key support near Rs 47900 (8 day EMA) and witnessed good rebound towards the key resistance zone of Rs 48950. Now price has to move beyond Rs 48950 (61.8 per cent Fibonacci retracement of the previous fall), to resume its upmove towards Rs 49250. On the downside, immediate supports are near Rs 48200, followed by Rs 47900. The strength index is still hovering above 60(66) suggesting firmness in the trend. So for the day, price is expected to move in the range of Rs 47900-48950 with a sideways bias. Only a sustained move above Rs 48950 would push prices further towards Rs 49250.
Strategy:
Buy MCX Gold June at Rs 48250 with a target price of Rs 48900 and a stop loss at Rs 47900.
MCX Silver May futures closed on the losing side after a highly volatile session. The key resistance for July futures exists around Rs 73300, followed by Rs 74450 (Previous Top). Similarly, strong support holds around Rs 71200, followed by Rs 70400 (20 day EMA). The bullish trend channel is intact, along with bullish crossover of 8 and 20 day EMA which helped prices to erase its losses. Momentum oscillator RSI is hovering near 60, that supports the bullish momentum. However, price has to breach the previous top and key resistance of Rs 74450 to regain its momentum. To conclude, we expect silver to trade in the range of Rs 70400-73300 with a sideways bias.
Strategy:
Trading range for MCX Silver is Rs 70400-73300.
(Ravindra Rao, CMT, EPATVP-Head Commodity Research at Kotak Securities)
