Commodity prices traded higher on Wednesday, after trading mixed in the previous session. On Tuesday, base metals closed higher on a softer dollar while bullion and crude oil prices traded with cuts for the day. The dollar index fell by 0.16 per cent to 91.76 for the day on Fed comments. Here is a look at how different commodities are behaving in today’s market.
Outlook: Bullion
Bullion prices traded steady on Wednesday as spot gold price at COMEX was trading higher near $1781 per ounce, while spot silver price at COMEX was trading nearly a per cent higher at $25.96 per ounce in the morning trade. Bullion prices pared previous losses after Fed Chairman Jerome Powell warned that the economic recovery will need more time before unwinding the stimulus. He reaffirmed that tighter monetary policy is far away due to higher inflation concerns. Gold prices are hovering in a steady range on dollar fluctuations and mixed global cues. The dollar index fell from two-month highs below the 92-mark post the Fed’s testimony. We expect bullion prices to trade sideways to up for the day.
Trading Strategy:
MCX Gold August resistance for the day lies at Rs. 47300 per 10 grams with support at Rs. 46800 per 10 grams.
MCX Silver July support lies at Rs. 66500 per KG, resistance at Rs. 69800 per KG.
Outlook: Crude Oil
Crude oil prices traded firm on Wednesday with benchmark NYMEX WTI crude oil price was trading 0.51 per cent up at $73.22 per barrel in the morning trade. Crude oil prices traded higher, reversing the previous losses on falling US stockpiles. Crude oil prices witnessed selling on expectations that OPEC plus nations may consider output hike when they meet next week. We expect crude oil prices to trade sideways to up for the day.
Trading Strategy:
MCX Crude Oil July support lies at Rs. 5380 per barrel with resistance at Rs. 5510 per barrel.
Outlook: Base Metals
Base metals prices traded higher on Wednesday as most of the metals witnessed recovery from Tuesday’s lows. Base metals traded higher on a weaker dollar and China’s announcement to sell relatively small quantities in its first release of stockpiles. The first batch for release next month will include 20,000 tons of copper, 30,000 tons of zinc, and 50,000 tons of aluminum. Copper prices rallied on the tight supply of the concentrated material. Base metals are expected to trade up for the day.
Trading Strategy:
MCX Copper June support lies at Rs. 710 and resistance at Rs. 725.
MCX Zinc June support lies at Rs. 230, resistance at Rs. 238.
MCX Nickel June support lies at Rs. 1310 with resistance at Rs. 1360.
(Tapan Patel is Senior Analyst (Commodities) at HDFC Securities)
By Ravindra Rao
MCX Gold August futures are consolidating in a wider range of Rs. 46600-47380 after last week’s sharp decline. The price is hovering near the lower Bollinger band support, which has limited the downside in prices. On the upside, the 250-day EMA (47380) is the key resistance for August futures. A break above the said resistance would provide a bullish tilt for prices taking it towards Rs. 47750-47900 zones. On the downside, Rs. 46600 holds the key support, followed by Rs. 46220 (61.8 per cent Fibonacci retracement level of the uptrend). On the momentum front, RSI is hovering near 36, suggesting a sideways to weaker trend. So for the day, the trading range seems to be Rs. 46600-47380. Only a closing break on either side would bring more clarity to the trend.
Strategy:
Buy MCX Gold August futures at Rs. 46850 with a target price of Rs. 47350 and a stop loss at Rs. 46600.
MCX Silver July futures continued to trade in a sideways trend following the yellow metal. The price held the strong support of Rs. 66900 (61.8 per cent Fibonacci retracement level), which coincides with the lower Bollinger band. The key resistance for the price is at Rs. 68950 (5-day EMA). If it manages to get above the 5-day EMA, then the upside might extend towards Rs. 69750. The nearby support for July futures exists around Rs. 66900-66600 levels. A decline below the said levels would extend the downside towards its next support at Rs. 65500. Short-term momentum has turned negative as RSI is hovering near 34. So for the day, the price might continue to move in the range of Rs. 66600-68950, with a sideways bias. Only a close above Rs. 68950 would extend the price recovery towards Rs. 69750.
Strategy:
Buy Silver July futures at Rs. 67200 with a target price of Rs. 68550 and a stop loss at Rs. 66500.
(Ravindra Rao, CMT, EPAT is VP-Head Commodity Research at Kotak Securities)
