Commodity prices traded mixed on Tuesday, continuing the trend from the previous session. On Monday, most of the commodities in the non–Agro segment kept to steady trading range with lower volumes as few of the global markets were shut for holiday. Bullion prices extended gains while Base metals complex traded mixed on disappointing China manufacturing data. Crude oil futures traded firm on strong demand prospects. Here is a look at how different commodities are behaving in today’s market.
Outlook: Bullion
Bullion prices traded firm on Tuesday with spot gold price at COMEX was trading near $1910 per ounce while spot silver price at COMEX was trading over half a percent up at $28.20 per ounce in the morning trade. Precious metals traded higher extending gains on mixed global cues as US and Europe markets will return from Holiday. Investors are focused on a weaker dollar over better than expected China factory data. The dollar index was trading 0.20 per cent lower in the morning trade. We expect bullion prices to trade sideways to up for the day.
Trading Strategy:
MCX Gold Aug resistance for the day lies at Rs. 49800 per 10 grams with support at Rs. 49200 per 10 grams.
MCX Silver July support lies at Rs. 71200 per KG, resistance at Rs. 73500 per KG.
Outlook: Crude Oil
Crude oil prices traded firm with benchmark NYMEX WTI crude oil price was trading 1.96 per cent up at $67.62 per barrel in the morning trade. Crude oil price traded higher on higher demand outlook from US, Europe and China with reopening of economic activities. The strong factory activity data from China and weaker dollar has pushed oil prices higher with US markets returned from Holiday. The higher demand expectations from upcoming summer driving season have also supported oil prices to trade up. We expect crude oil prices to trade sideways to up for the day.
Trading Strategy:
MCX Crude Oil June support lies at Rs. 4850 per barrel with resistance at Rs. 4980 per barrel.
Outlook: Base Metals
Base metals prices traded mixed on Tuesday as most of the metals kept to positive trading range. Base metals are trading firm on demand growth optimism with positive Chinese factory activity data. Data released earlier in the day said that the Caixin Manufacturing Purchasing Managers’ Index (PMI) increased to 52 in May, the highest level since December 2020. Copper prices are trading up with supply concerns from Chile as Workers at BHP’s Spence mine in Chile rejected a final wage offer leading to mediation. Base metals are expected to trade sideways to up for the day.
Trading Strategy:
MCX Copper June support lies at Rs. 765 and resistance at Rs. 780.
MCX Zinc June support lies at Rs. 236, resistance at Rs. 242.
MCX Nickel June support lies at Rs. 1290 with resistance at Rs. 1350.
(Tapan Patel is Senior Analyst (Commodities) at HDFC Securities)
By Ravindra Rao
MCX Gold August futures held on to its gains after the trend line breakout. Moreover, formation of a bullish flag, a bullish continuation pattern also supported the upside momentum. Immediate resistance for the price exists around Rs. 49,700, which could be the possible target for the day. A move above would push the price further towards the Rs. 49,900-50,000 zone. The daily RSI is in bullish mode, which has further strengthened the bull case. Immediate support for August futures holds around Rs. 49200, followed by Rs. 48700. To conclude, gold is expected to trade on a positive note as long as it sustains above Rs. 48700. A dip towards the supports would attract buying for an initial objective of Rs. 49700.
Strategy:
Buy MCX Gold Aug at Rs. 49150 with a target of Rs. 49700 and a stop loss at Rs. 48750.
MCX Silver July futures continued consolidating in a sideways range of Rs. 70,500-72,800. However, price is trading inside the rising trend channel with the support of bullish crossover of 8 and 21 day EMA, providing the much needed support to the bulls. Now Rs. 70500 seems to be a key support zone as it has reversed from that level on a couple of occasions forming a strong base (double bottom). However, the price has to move above the key resistance of Rs. 72,800 to confirm the breakout and extend the rally towards Rs. 74100. The momentum indicator (RSI) is hovering above 55, suggesting a sideways to higher trend. Hence, we expect silver to trade in the range of Rs. 70500-72800 with a sideways to positive bias. Only a sustained move above Rs. 72800 would bring renewed buying interest for a profit objective of Rs. 74100.
Strategy:
Buy MCX Silver July at Rs. 71,800 with a target of Rs. 72800 and a stop loss at Rs. 71000.
(Ravindra Rao, CMT, EPAT is VP-Head Commodity Research at Kotak Securities)
