Commodity prices traded mixed on Tuesday with bullion prices in red. Crude oil prices rallied witnessing strong recovery on higher demand outlook outweighing Covid worries. Base metals traded higher on US infrastructure bill on bright demand outlook. Here is a look at how different commodities are behaving in today’s market.
Outlook: Bullion
Bullion prices traded steady on Wednesday with spot gold prices at COMEX trading near $1,734 per ounce while spot silver prices at COMEX trading marginally up at $23.42 per ounce in morning trade. Gold prices kept rangebound trading looking for cues from global markets. The US Senate has passed $1 trillion infrastructure plan which may lend some support to bullion prices. However, heightened expectations of Fed tapering may limit upside in bullion prices. We expect bullion prices to trade sideways to down for the day.
Trading Strategy:
Gold October resistance for the day lies at Rs 46,300 per 10 gram with support at Rs 45,700 per 10 gram. MCX Silver September support lies at Rs 61,800 per kg, resistance at Rs 64,000 per kg.
Outlook: Crude Oil
Crude oil prices traded marginally down on Wednesday with benchmark NYMEX WTI crude oil prices trading 0.29% lower near $68.08 per barrel in morning trade. Crude oil prices witnessed strong recovery on Tuesday on strong demand outlook despite growing Covid worries. The US API data showed drawdown of 0.81 mb in weekly inventories. The $1 trillion US infrastructure bill may also boost investment sentiment in crude oil. We expect crude oil prices to trade sideways to up for the day.
Trading Strategy: MCX Crude Oil August support lies at Rs 5,020 per barrel with resistance at Rs 5,160 per barrel.
Outlook: Base Metals
Copper prices pared some gains after BHP cracked temporary wage agreement with labour union averting a major strike. Aluminum prices gained on lower supply concerns with China crackdown on polluting industries. Base metals may trade sideways to up for the day.
Trading Strategy: MCX Copper August support lies at Rs 726 and resistance at Rs 736. MCX Zinc August support lies at Rs 245, resistance at Rs 252. MCX Nickel August support lies at Rs 1,410 with resistance at Rs 1,460.
(Tapan Patel is Senior Analyst (Commodities), HDFC Securities. Views are his own)
By Ravindra Rao
MCX Gold futures tried to settle down during the previous trading session as the market continued to adjust to the sharp sell-off on Monday. Gold witnessed a recovery towards the end of the session after testing the low of Rs 45,660, which could be the key support level for the day. A move below Rs 45,660 would extend the downside towards Rs 45,300. Immediate resistance exists around Rs 46,400, followed by Rs 46,600 (5-day EMA). Meanwhile, the strength index RSI is hovering near the oversold zone 30 (30.30), suggesting a weaker trend. However, the oversold nature of RSI could limit further downside in price. So for the day, price is expected to move in the range of Rs 45,660-46,600 with a sideways bias.
Trading Range: Rs 45,660-46,600
MCX Silver prices erased its earlier gains and closed near the key support zone of Rs 62,200-62,000 following the Monday sell-off. Resistance is seen near the 5-day EMA at Rs 64,400, followed by support at Rs 65,600. The momentum indicator MACD has turned negative as it generated a crossover sell signal and the MACD histogram has moved in negative territory. For the day, Rs 62,200-62,000 zone holds key support. If price holds then it would rebound towards Rs 63,800, followed by Rs 64,400. On the flip side, a move below Rs 62,000 would extend the weakness further towards Rs 60,800. So for the day, price is expected to move in the range of Rs 62,000-64,400 with sideways to weaker bias. Only a sustained move above Rs 64,400 could bring a relief rally in silver futures.
Trading Range: Rs 62,000-Rs 64,400
(Ravindra Rao is VP-Head Commodity Research at Kotak Securities Ltd. Views are his own)
