Commodity prices traded on a weak note on Wednesday after trading mixed in the previous session. On Tuesday, bullion prices traded under pressure ahead of US FOMC while base metals complex kept to firm trading range with Copper and Nickel prices gaining the most. Crude oil traded up on demand growth optimism after OPEC comments. Here is a look at how different commodities are behaving in today’s market.
Outlook: Bullion
Bullion prices traded marginally down with spot gold price at COMEX was trading near $1772 per ounce while spot silver price at COMEX was trading 0.78 per cent down near $26.04 per ounce in the morning trade. Bullion prices traded under pressure on dollar recovery ahead of US FOMC meeting and US President Joe Biden’s speech. The dollar index recovered from eight week lows which capped the safe haven demand for precious metals. The US Fed is expected to maintain the policy intact in today’s meeting while market will eye on comments from Fed official and US President. We expect bullion prices to trade sideways to down for the day.
Trading Strategy:
MCX Gold June resistance for the day lies at Rs. 47500 per 10 grams with support at Rs. 46800 per 10 grams.
MCX Silver May support lies at Rs. 67000 per KG, resistance at Rs. 69800 per KG.
Outlook: Crude Oil
Crude oil prices traded flat on Wednesday with benchmark NYMEX WTI crude oil prices were trading near $62.92 per barrel in the morning trade. Crude oil prices traded up on higher demand prospectus after OPEC committed to increased supply by 2 mb per day for next three months. The higher demand from US and China will absorb supply hike in coming months. Traders and investors will await US weekly crude oil inventory data in the evening session. We expect crude oil prices to trade sideways to up for the day.
Trading Strategy:
MCX Crude Oil May support lies at Rs. 4650 per barrel with resistance at Rs. 4760 per barrel.
Outlook: Base Metals
Base metals prices traded weak on Wednesday as most of the metals witnessed selling in the morning trade on stronger dollar. Copper prices pared previous gains as forward premiums in China fell to 4 year low. Yangshan copper premium fell to $45.50 a tonne, it lowest since April 2017. Copper prices at LME are nearing all-time highs while ample supply may keep spot market balanced. Base metals are expected to trade sideways to down for the day.
Trading Strategy:
MCX Copper May support lies at Rs. 748 and resistance at Rs. 760.
MCX Zinc May support lies at Rs. 230, resistance at Rs. 234.
MCX Nickel May support lies at Rs. 1240 with resistance at Rs. 1310.
(Tapan Patel is Senior Analyst (Commodities) at HDFC Securities)
By Ravindra Rao
For the fourth straight session, bear strength was seen in
MCX Gold as the price fell from the recent highs. We maintain that although the short term trend is positive some more corrective move is possible. Resistance for the day is pegged at Rs 47500 and strong resistance near Rs 47800. RSI has moved below 50 indicating bear strength. Support is near Rs 47080 and strong support is close to Rs 46900. For the day, we expect price to trade with a negative bias until Rs 47800 holds. Immediate downside objective would be Rs 47080 followed by Rs 46900. Only a break above Rs 47800 might once again give bulls the edge to take it past Rs 48400.
Strategy:
Sell MCX Gold June at Rs 47450 with a target of Rs 47080/46900 and a stop loss at Rs 47800.
In yesterday’s session a divergence was seen in gold and silver as
MCX Silver ended slightly on a positive note. However, the closing was below Rs 69000. The immediate trend is still sideways to bearish as the price is still below Rs 69500. RSI is close to 50 indicating sideways move. Resistance is near Rs 69500, above which the bulls might get an edge. Similarly immediate support is near Rs 68300 and strong support near Rs 67900. Going by the above evidences, we expect silver to trade in the range of Rs 69000-68400. A break of Rs 69500 or 67900 levels would give direction to price.
Strategy:
Sell MCX Silver May at Rs 68800 with a target price of Rs 68300/68000 and a stop loss at Rs 69200.
(Ravindra Rao, CMT, EPAT, is VP-Head Commodity Research at Kotak Securities)
