Commodity prices traded mixed on Thursday, continuing the trend from the previous session. On Thursday, bullion prices pared daily gains as dollar recovery ended in the red. Base metals witnessed a strong comeback with demand growth optimism and supply concerns from Chile. Crude oil prices traded firm in the upper range on bullish weekly inventory data. The dollar index recovered from the recent lows and ended 0.45 per cent up for the day. 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 prices at COMEX were trading near $1897 per ounce while spot silver prices at COMEX were trading flat at $27.65 per ounce in the morning trade. The precious metals reversed gains on Wednesday as gold prices fell below $1900 per ounce on the stronger dollar as investors gauged inflation worries. Federal Reserve Vice Chairman for Supervision Randal Quarles said on Wednesday that it will be important for the US central bank to begin discussing in the coming months on plans to reduce its massive bond purchases. 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. 48500 per 10 grams.
MCX Silver July support lies at Rs. 70200 per KG, resistance at Rs. 72800 per KG.
Outlook: Crude Oil
Crude oil prices traded weak with benchmark NYMEX WTI crude oil prices were trading 0.59 per cent down near $65.82 per barrel in the morning trade. Crude oil prices traded under pressure on the possible return of Iranian supply and weaker demand from emerging economies. The weekly US inventory draw failed to support prices on Thursday while the stronger dollar also capped the upside. The traders and investors remained vary on mixed fundamentals which have kept oil prices in a range. We expect crude oil prices to trade sideways to down for the day.
Trading Strategy:
MCX Crude Oil June support lies at Rs. 4730 per barrel with resistance at Rs. 4890 per barrel.
Outlook: Base Metals
Base metals prices traded mixed on Thursday with most of the metals held to a steady trading range except Nickel. Copper hovered on mixed global cues on supply concerns from Chile and China policy action fears. Base metals traded under pressure on stronger dollar and expectations that China may consider winding back emergency stimulus to cool down over increasing prices. Base metals are expected to trade sideways to down for the day.
Trading Strategy:
MCX Copper June support lies at Rs. 739 and resistance at Rs. 754.
MCX Zinc June support lies at Rs. 231, resistance at Rs. 237.
MCX Nickel June support lies at Rs. 1240 with resistance at Rs. 1280.
(Tapan Patel is Senior Analyst (Commodities) at HDFC Securities)
By Ravindra Rao
MCX Gold June futures almost hit the key resistance zone of Rs. 49250 in yesterday’s trade. However, the price failed to capitalize on its gains and closed the day on the losing side. Key support for the day is at Rs. 48330 followed by Rs. 48150. On the upside Rs. 49250 holds initial resistance (Higher Bollinger Band), followed by Rs. 49550. Meanwhile, the price is hovering near the long term trend line resistance, a decisive break of which would strengthen the bull case. The strength index is at 65 suggesting bullishness in the trend. For the day, the price is expected to move in the range of Rs. 48330-49100 with a sideways to a bullish bias. Only a close below Rs. 48150 would change the trend to neutral.
Strategy:
Buy MCX Gold June at Rs. 48550 with a target price of Rs. 49100 and a stop loss at Rs. 48300
MCX Silver July futures failed to hold their gains and witnessed a sharp correction in price. Meanwhile, the price is hovering near the midline of the Bollinger band (71000), where it coincides with the rising trend channel support. Having said that, the zone of Rs 70500-71000 holds key support for silver. A failure to hold above Rs. 70500 would push the price towards Rs. 70000, followed by Rs. 68750 (Lower Bollinger Band). RSI on the daily charts is hovering around the 54 mark suggesting a sideways trend. The key resistance for July futures exists around Rs. 72900, followed by Rs. 74450 (Previous Top). Hence, we expect silver to trade in the range of Rs. 70500-72900 with a sideways bias. Only close below Rs. 70000 would change the trend.
Strategy:
The trading Range for MCX Silver lies between Rs. 70500-72900.
(Ravindra Rao, CMT, EPAT is VP-Head Commodity Research at Kotak Securities)
