Commodity prices traded mixed on Tuesday as Gold and Crude oil prices traded higher while silver and base metals witnessed some selling as US senate failed to pass proposed stimulus amount. The dollar index fell below 90 mark supporting bullion prices to trade higher on Wednesday. Here is a look at how different commodities are behaving in today’s market.
Outlook: Bullion
Bullion prices traded higher on Wednesday with spot gold prices at COMEX was trading half a percent up to $1,886 per ounce while spot silver prices at COMEX was trading over 1 per cent up to $26.46 per ounce in the morning trade. Bullion prices gained as dollar index fell below 90 losing 0.50 per cent from yesterday. The worries over economic recovery on pandemic fears has supported bullion prices to trade firm recovering from support levels. The traders and investors are watching US Senate drama over increasing stimulus checks amount. We expect bullion prices to trade sideways to up for the day on weaker dollar.
Trading Strategy:
MCX Gold February resistance for the day lies at Rs. 50,400 per 10 grams with support at Rs. 49,800 per 10 grams.
MCX Silver March support lies at Rs. 67,500 per KG, resistance at Rs. 69,800 per KG.
Outlook: Crude Oil
Crude oil prices traded upwards on Wednesday with benchmark NYMEX WTI crude oil prices were trading at $48.23 per barrel keeping the firm trading range. Crude oil prices gained on expectations of bullish inventory data after US API reported larger than expected drawdown of 4.8 mb. Crude oil prices got additional support from weaker dollar, despite stalled US stimulus package. Crude oil prices are expected to trade sideways to up for the day.
Trading Strategy:
MCX Crude Oil January support lies at Rs. 3,470 per barrel with resistance at Rs. 3,590 per barrel.
Outlook: Base Metals
Base metals prices traded higher on Wednesday as most of the metals gained, halting the two days’ decline. The fall in dollar index boosted buying in base metals along with recovery in equity indices. Earlier, base metals prices witnessed selling on demand recovery concern after US senate majority leader Mitch McConnel blocked the proposed stimulus amount to increase relief payment check amounts. Base metals demand has been affected due to recent lockdowns on pandemic fears over new strain of coronavirus. Base metals are expected to trade sideways to up for the day on weaker dollar.
Trading Strategy:
MCX Copper January support lies at Rs. 601 and resistance at Rs. 610.
MCX Zinc January support lies at Rs. 214, resistance at Rs. 220.
MCX Nickel January support lies at Rs. 1,240 with resistance at Rs. 1,270.
(Tapan Patel is a Senior Analyst (Commodities) at HDFC Securities)
By Ravindra Rao
MCX Gold February has been trading in the sideways range of Rs 49,800-50,690 since last few sessions. The lower bound is supported by 21 day EMA and the upside is resisted by 78.6 per cent Fibonacci extension. Meanwhile the momentum oscillator RSI is hovering around 54 suggesting sideways bias. In the near term, break on either side of the range 49,800-50,690 would bring more clarity on the direction. Above Rs 50,690, it would rise towards Rs 51,000. On the other hand below Rs 49,800, the trend might turn neutral to bearish.
Strategy:
Buy MCX Gold Feb at Rs 49,850 with a target of Rs 50,450 and a stop loss at Rs 49,600.
MCX Silver March future continued to move inside the upward sloping channel with lower band support near Rs 66,600-66,400. Price also got support from 5 day EMA (67,920) along with earlier breakout turned support zone near Rs 66,600. Moreover the bullish crossover of 5 and 21 day EMA along with strong RSI (62) has strengthened the bull case. Buying might resume in dips for an objective of Rs 69,500.
Strategy:
Buy MCX Silver Mar at Rs 67,900 with a target of Rs 69,500 and a stop loss at Rs 66,600.
(Ravindra Rao is VP-Head Commodity Research at Kotak Securities)
