Commodity prices traded steady on Thursday, after trading mixed in the previous session. On Wednesday, bullion prices witnessed recovery in the evening session paring the days’ losses over Fed comments while base metals traded under pressure on a stronger dollar and China demand concerns. Crude oil prices extended gains for the day on a strong demand outlook and OPEC confidence in demand recovery in the second half of the year. Here is a look at how different commodities are behaving in today’s market.
Outlook: Bullion
Bullion prices traded steady on Thursday with spot gold price at COMEX was trading near $1905 per ounce while spot silver price at COMEX was trading flat at $28.11 per ounce in the morning trade. Precious metals kept to firm trading range as gold prices hovered near a five-month high gaining above $1,900 on Fed official comments. The US Fed officials said to scale back bond-buying slowly when the economy has made substantial progress. Traders and investors will wait for today’s US ADP payroll data in the evening session. We expect bullion prices to trade sideways to up for the day.
Trading Strategy:
MCX Gold August resistance for the day lies at Rs. 49,800 per 10 grams with support at Rs. 49,200 per 10 grams.
MCX Silver July support lies at Rs. 71,200 per KG, resistance at Rs. 74,000 per KG.
Outlook: Crude Oil
Crude oil prices traded higher with benchmark NYMEX WTI crude oil prices were trading 0.70 per cent up at $69.31 per barrel in the morning trade. Crude oil prices are trading above the near term resistance of $68 rallying on a strong demand outlook. Crude oil prices have gained on fuel demand recovery hopes from the US, China, and Europe after OPEC forecast higher demand in the second half of the year. OPEC+ data shows that by the end of the year oil demand will be 99.8 Mb per day versus supply of 97.5 Mb per day. We expect crude oil prices to trade sideways to up for the day eyeing official US weekly inventory data later today.
Trading Strategy:
MCX Crude Oil June support lies at Rs. 4,980 per barrel with resistance at Rs. 5,120 per barrel.
Outlook: Base Metals
Base metals prices traded firm on Thursday rebounding from previous losses. Base metals traded under pressure on stronger dollar and demand concerns from China. Base metals have a caped downside on positive global cues followed by the strong US data. Copper prices are getting a support from supply concerns as miner BHP has been facing labor strikes at its Escondida and Spence mines in Chile, while a landslip at Rio Tinto’s US Bingham Canyon copper mine disrupted operations. Base metals are expected to trade sideways to up for the day.
Trading Strategy:
MCX Copper June support lies at Rs. 754 and resistance at Rs. 772.
MCX Zinc June support lies at Rs. 239, resistance at Rs. 245.
MCX Nickel June support lies at Rs. 1310 with resistance at Rs. 1370.
(Tapan Patel is Senior Analyst (Commodities) at HDFC Securities)
By Ravindra Rao
MCX Gold August futures have tested the key resistance zone of Rs. 49,700-49,750. Now it will be crucial for the bulls to take it past Rs. 49750 on a closing basis for the next target near Rs. 50,050. Till then, the price might consolidate in the band of Rs. 49,150-49,750. While Rs. 48,700 holds the key support below Rs. 49,150. RSI is still supporting the bullish momentum. Based on the current price action, the market is expected to move in a sideways range of Rs. 49,150-49,750. Only a move above Rs. 49,750 would push the price towards Rs. 50,050. On the flipside below Rs. 49150, the fall might extend towards Rs. 48700.
Strategy:
Buy MCX Gold August at Rs. 49,350 with a target of Rs. 49,700 and a stop loss at Rs. 49.100.
MCX Silver July futures witnessed a good rebound from the midline of the Bollinger band and ended with gains yesterday. The price trend seems to be sideways as it has failed to breach the consolidation range of Rs. 73,600-70,500 on multiple occasions. However, the rising trend channel is well in place with the support of 21-day EMA at Rs. 71,550. Now Rs. 70,500 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). On the upside, key resistance exists around Rs. 73,600, followed by Rs. 74,100. The momentum indicator (RSI) is hovering above 60, suggesting a sideways to higher trend. From the above, we expect silver to trade in the range of Rs. 71,550-73,600 with a sideways bias. Only a close above Rs. 73,600 would push the price towards Rs. 74,100.
Strategy:
The trading range for MCX Silver is between Rs. 71,550-73,600.
(Ravindra Rao, CMT, EPAT is VP-Head Commodity Research at Kotak Securities)
