Commodity prices traded mixed on Monday with bullion in green, paring early loses while base metals traded lower on weak China and US data. Crude oil prices extended decline on weaker demand outlook over growing virus worries. The dollar index ended up by 0.12% for the day. Here is a look at how different commodities are behaving in today’s market.
Outlook: Bullion
Bullion prices traded steady on Tuesday with spot gold prices at COMEX near $1,786 per ounce, while spot silver prices at COMEX trading marginally up at $23.86 per ounce in morning trade. The precious metals extended weekly gains, witnessing recovery from the day’s low on wake of disappointing economic data and worries over fast spreading Delta variant cases. The fall in US bond yields supported bullion rally which fell to 1.25% for the day. We expect bullion prices to trade sideways to up for the day on mixed global cues.
Trading Strategy:
Gold October resistance for the day lies at Rs 47,500 per 10 gram with support at Rs 46,900 per 10 gram. MCX Silver September support lies at Rs 62,500 per kg, resistance at Rs 65,000 per kg.
Outlook: Crude Oil
Crude oil prices traded steady on Tuesday with benchmark NYMEX WTI crude oil prices trading firm near $67.08 per barrel in morning trade. Crude oil prices traded firm on expectations that OPEC plus nations may not increase oil production soon. We expect crude oil prices to trade sideways to down for the day.
Trading Strategy: MCX Crude Oil August support lies at Rs 4,920 per barrel with resistance at Rs 5,070 per barrel.
Outlook: Base Metals
Base metals traded firm with most of the metals trading in the green on Tuesday. Aluminium traded over half a percent up on lower supply concerns from China. Zinc and copper prices traded up on possible port operation disruption in China as virus restrictions may limit supply. China has halted operations at Alashankou land port in Xinjiang after confirming three coronavirus cases. The temporary halt is also affecting zinc and lead concentrate imports from Kazakhstan and Russia as the port is a main entry point for supplies of those commodities. Base metals may trade sideways to up for the day.
Trading Strategy: MCX Copper August support lies at Rs 720 and resistance at Rs 734. MCX Zinc August support lies at Rs 248, resistance at Rs 254. MCX Nickel August support lies at Rs 1,460 with resistance at Rs 1,520.
(Tapan Patel is Senior Analyst – Commodities – HDFC Securities. Views are his own)
Ravindra Rao
MCX Gold futures have retraced 61.8% Fibonacci retracement level of the recent down trend at Rs 47,300, suggesting recovery in gold prices. At this point, the 200-day EMA (Rs 47,600) could act as a key resistance zone, which could limit the rally. The price has to sustain above its 200-DEMA to extend a rebound towards Rs 47,800-48,000 zone. On the downside, Rs 46,800(8-day EMA) holds immediate support, followed by Rs 46,400. Meanwhile, the rebound in RSI has strengthened the recovery. However, RSI is still hovering below 50 (49), which needs to go above 50 for a sustained up move. So going by the above evidence, it is expected that the price will move in the range of Rs 46,800-47,600 with a sideways bias. Only a close below Rs 46,800 would weaken the recovery.
Trading Range: Rs 46,800-47,600
MCX Silver is currently trying to settle above its initial resistance of 8-day EMA at Rs 63,900 after its recovery from last week’s low of Rs 61,500. In case the price gets above Rs 63,900, it will move towards the next resistance at Rs 65,200 (20-day EMA). For the day, Rs 62,400 holds key support, followed by Rs 61,500. Only a move below Rs 61,500 would extend the weakness further towards Rs 60,400-60,000. Meanwhile, the reversal in RSI (35) from the oversold zone has supported the rebound. However, it is still below 50 which might impact the bulls. So for the day, the price is expected to move in the range of Rs 62,400-63,900 with a sideways bias, ahead of US Fed chair’s speech and FOMC meeting minutes.
Trading Range: Rs 62,400-63,900
(Ravindra Rao, CMT , EPAT, VP-Head Commodity Research at Kotak Securities Ltd. Views are his own)
