Commodity strategies: Gold, silver, crude, base metals

By Tapan Patel


Here is a look at how different commodities are behaving in today’s market.

Outlook: Bullion

Bullion prices traded up on Monday with spot gold prices at COMEX up 0.44% near $1800 per ounce while spot silver prices at COMEX rose 0.90% to $24.53 per ounce in the morning trade. Gold prices were supported by a fall in US bond yields as 10-year US Treasury yields dropped to 1.64% on Monday. Global inflation worries and renewed COVID related restrictions in Russia and some parts of Europe may add risk premiums in the prices. Silver prices were outperforming gold on higher demand for industrial metals. Bullion prices may trade sideways to up for the day.

Trading Strategy:

MCX Gold December resistance for the day lies at Rs. 48200 per 10 grams with support at Rs. 47700 per 10 grams. MCX Silver December support lies at Rs. 63800 per KG, resistance at Rs. 67800 per KG.

Outlook: Crude

Crude oil prices traded higher on Monday with benchmark NYMEX WTI crude oil prices up by 1% at $84.61 per barrel in the morning trade. Crude oil prices traded near seven-year high on supply tightness and higher demand outlook. The prices rose with a rally in gas and coal prices resulting in fuel-switching for power. We expect crude oil prices to trade sideways to down for the day. The CFTC data showed that money managers increased their net long positions by 20231 lots last week.

Trading Strategy:

MCX Crude Oil November support lies at Rs. 6270 per barrel with resistance at Rs. 6450 per barrel.

Outlook: Base Metals

Base metals prices traded higher with most metals reporting a positive opening. Base metals traded up on higher demand and lower supply worries, with Aluminum, Zinc and Nickel gaining the most in the morning trade. Base metals got a boost with a rise in gas and coal prices while supply concerns from Peru supported copper prices. The Chinese government has ensured to ease a power shortage in the coming months. Base metals may trade sideways to up for the day.

Trading Strategy:

MCX Copper November support lies at Rs. 765 and resistance at Rs. 778. MCX Zinc November support lies at Rs. 282, resistance at Rs. 295. MCX Aluminium November support lies at Rs. 232 with resistance at Rs. 243.

Disclaimer: Tapan Patel- Senior Analyst (Commodities), HDFC securities. Views expressed are personal.

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