Commodity prices traded mixed on Tuesday with gold prices ending in the green following strong buying. Silver prices traded weak following selling in base metals. Base metals prices declined on weak US service PMI data. Crude oil prices pared early gains as traders ignored OPEC standoff. The dollar index was up by 0.36 per cent for the day. Here is a look at how different commodities are behaving in today’s market.
Outlook: Bullion
Bullion prices traded firm on Wednesday with spot gold prices at COMEX trading near $1,800 per ounce, while spot silver prices at COMEX were trading flat at $26.15 per ounce in the morning trade. Gold prices kept firm, paring some previous gains on dollar recovery. Weak US service PMI data supported gold prices to trade firm, while silver prices declined in line with selling in base metal over demand concerns. However, the fall in equity indices has shifted safe haven buying into bonds and the dollar putting pressure on precious metals. We expect bullion prices to trade sideways to up for the day.
Trading Strategy
MCX Gold August resistance for the day lies at Rs 48,000 per 10 gram with support at Rs 47,400 per 10 gram.
MCX Silver September support lies at Rs 67,800 per KG, resistance at Rs 72,500 per KG.
Outlook: Crude Oil
Crude oil prices traded marginally lower on Wednesday with benchmark NYMEX WTI crude oil prices trading near $73 per barrel in the morning trade. Crude oil prices witnessed selling in previous trading as traders and investors digested Saudi Arabia-UAE standoff on output quota. The OPEC+ talks collapsed on Monday as the United Arab Emirates (UAE) seeks to increase supply against Saudi Arabia’s proposal to keep a tight lid on production. We expect crude oil prices to trade sideways to up for the day.
Trading Strategy
MCX Crude Oil July support lies at Rs 5,420 per barrel with resistance at Rs 5,570 per barrel.
Outlook: Base Metals
Base metals prices traded up on Wednesday as most of the metals kept firm trading range on digesting weak US data. Earlier, base metals declined following disappointing US service PMI data and dollar rally. Base metals got support from a weaker dollar on Wednesday despite weak Asian equity indices. Base metals prices are trading steady, limiting downside on easing worries of China monetary tightening. Base metals may trade sideways to up for the day.
Trading Strategy
MCX Copper July support lies at Rs 717 and resistance is seen at Rs 730. MCX Zinc July support lies at Rs 234, resistance at Rs 242. MCX Nickel July support lies at Rs 1,340 with resistance at Rs 1,390.
(Tapan Patel is Senior Analyst (Commodities) at HDFC Securities)
By Ravindra Rao
MCX Gold futures witnessed a brief rise during the previous trading session to reach the immediate resistance level of Rs 48,000. Price has breached the key resistance Rs 47,700 (20-day EMA), which has supported the bull case. Now it has to sustain above the 20-day
to extend its rally towards Rs 48,000, followed by Rs 48,400. On the downside, key support holds around Rs 47,350 (250-Day EMA). If it breaks down below that level, the price could slip towards Rs 47,000.
Meanwhile, the RSI on the daily charts has moved above the 50 mark, which has strengthened the bullish momentum. For the day, price is expected to trade in the range of Rs 47,350-48,000 with sideways to positive bias. Only a sustained move above Rs 48,000 would extend the rally towards Rs 48,400.
Strategy
Buy MCX Gold August futures at Rs 47,550 with a target of Rs 48,000 and a stop loss of Rs 47,300
MCX Silver price erased its earlier gains and closed the day with losses as price faced stiff resistance near Rs 71,100. Meanwhile, the price is hovering near the midline of the Bollinger band at Rs 69,450, which has limited the downside in price. The immediate support for price holds around Rs 69,200 (8-day EMA), followed by 61.8% Fibonacci level at Rs 67,800. On the upside, resistance is seen around Rs 71,100, followed by Rs 72,600.
The strength index RSI is supporting a sideways trend as it continues to hover near the 50-mark (49). For the day, the price is likely to move in the range of Rs 68,400-71,100 with a sideways bias. Only close above the 71,100-71,300 zone would push the price towards Rs 72,600.
Trading Range: Rs 68,400-71,100
(Ravindra Rao is CMT , EPAT, VP-Head Commodity Research, Kotak Securities)
