Commodity prices traded firm on Wednesday with most of the non-agro commodities ending in green except crude oil. Bullion prices traded firm despite a stronger dollar due to fall in US treasury yields, while base metals prices traded strong on higher demand outlook. Crude oil prices witnessed profit booking on OPEC tantrums. 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 prices at COMEX trading near $1,797 per ounce, while spot silver prices at COMEX were trading 0.88 per cent down at $25.89 per ounce in the morning trade. The precious metals traded off the recent highs on stronger dollar on US Fed tapering expectations. Gold prices were supported by fall in US treasury yields as 10-year treasury yields declined to 1.321 per cent, marking the lowest levels since 18 February. The US FOMC minutes shows that the US Fed may soon start discussing unwinding talks, while few of the members were still in favour of tight monetary policy. We expect bullion prices to trade sideways to down for the day.
Trading Strategy
MCX Gold August resistance for the day lies at Rs 48,000 per 10 gram with support at Rs 47,300 per 10 grams. MCX Silver September support lies at Rs 67,200 per KG; resistance is seen at Rs 70,200 per KG.
Outlook: Crude Oil
Crude oil prices traded marginally lower with benchmark NYMEX WTI crude oil prices near $72 per barrel in the morning trade. Crude oil prices witnessed selling for the third consecutive day as traders and investors continued to weigh on OPEC disagreement over output quota. Crude oil prices traded under pressure despite a drawdown in weekly inventories. The API data showed that crude oil stockpiles fell by 7.98 mb last week. We expect crude oil prices to trade sideways to down for the day.
Trading Strategy
MCX Crude Oil July support lies at Rs 5,320 per barrel with resistance at Rs 5,470 per barrel.
Outlook: Base Metals
Base metals prices traded weak with most of the metals trading lower on stronger dollar on fear the Fed may discuss unwinding of the bond buying programme. Earlier, base metal prices traded higher on higher demand outlook and lower supply concerns from falling inventories. Copper prices may limit the downside as stockpiles at warehouses tracked by the Shanghai Futures Exchange have dropped to the lowest since February. Base metals may trade sideways to down for the day.
Trading Strategy
MCX Copper July support lies at Rs 720 and resistance 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 have been moving in a positive bias since the beginning of the week but it struggled to go past the key resistance of Rs 48,000 (50% Fibonacci level of the downtrend). So if the price breaks above the Rs 48,000 mark, then the price might rally towards Rs 48,400. On the downside, key support holds around Rs 47,350 (250-Day
). If we break down below that level, then the price could slip towards Rs 47,000.
Meanwhile, RSI on the daily charts is sustaining above 50, which has strengthened the bullishness in the price trend. 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 futures had given up early gains during the last trading session ahead of the US FOMC minutes. The September contract is facing strong resistance near Rs 71,300 (78.6% Fibonacci level), and immediate resistance exists around Rs 70,500. Similarly, the instant support for price holds around Rs 68,400, followed by 61.8% Fibonacci level at Rs 67,800.
The strength index RSI is supporting a sideways trend, as it continued to hover around the 50 mark (48). For the day, the price is likely to move in the range of Rs 68,400-70,500 with sideways bias. Only a close below Rs 68,400 would extend weakness towards Rs 67800
Trading Range: 68400-70500
Ravindra Rao is CMT
,
EPAT
,
VP-Head Commodity Research, Kotak Securities Ltd.
