Commodity prices traded on a mixed note on Wednesday, continuing the trend from the previous session. On Tuesday, bullion prices kept to range bound trading despite of a weaker dollar. Crude oil prices traded weak on rise in weekly inventories and progress in Iran talks while base metals kept to muted trading, witnessing some selling pressure along with weak equity indices. 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 price on COMEX was trading near $1869 per ounce while spot silver price on COMEX was trading over half a percent down at $28 per ounce in the morning trade. The precious metals kept to a range bound trading with gold hovering near four-month high on mixed global cues. A weaker dollar and fall in equity indices supported bullion prices, limiting the downside. Europe and UK are easing lockdown restrictions which may limit some gains in gold prices. However, market focus will be on tonight’s Fed minutes. We expect bullion prices to trade sideways to up for the day.
Trading Strategy:
Gold June resistance for the day lies at Rs. 48700 per 10 grams with support at Rs. 48000 per 10 grams.
MCX Silver May support lies at Rs. 71200 per KG, resistance at Rs. 74000 per KG.
Outlook: Crude Oil
Crude oil prices traded lower with benchmark NYMEX WTI crude oil price was trading down by more than 1 per cent near $64.77 per barrel in the morning trade. Crude oil prices witnessed selling on expectations of revival in Iranian supplies with progress on nuclear deal talks. The lifting of Iranian sanctions may increase global oil supply putting more pressure on oil prices. Crude oil prices declined with rise in weekly inventories as per API institute. We expect crude oil prices to trade sideways to down for the day.
Trading Strategy:
MCX Crude Oil June support lies at Rs. 4690 per barrel with resistance at Rs. 4830 per barrel.
Outlook: Base Metals
Base metals prices traded weak as most of the metals traded in the red on Wednesday. Base metals complex traded under pressure over higher inflation concerns which may prompt China to take policy action. Investors and traders are also speculating over Fed minutes due today eyeing any signal of a hike in interest rates. The selling in equity indices has also pressured base metals to trade weak. Base metals are expected to trade sideways to down for the day.
Trading Strategy:
MCX Copper May support lies at Rs. 770 and resistance at Rs. 787.
MCX Zinc May support lies at Rs. 234, resistance at Rs. 240.
MCX Nickel May support lies at Rs. 1290 with resistance at Rs. 1350.
(Tapan Patel is Senior Analyst (Commodities) at HDFC Securities)
By Ravindra Rao
MCX Gold June futures have witnessed a pause in its rally, as prices failed to move beyond the key resistance level at Rs 48500 (Higher Bollinger Band). Price also faced the resistance of the key trend line near Rs 48450. Immediate support for price holds around Rs 47880 (8 Day EMA), followed by Rs 47480 (20 Day EMA), which could be the key levels for near term. The strength index is still hovering above 60(63) suggesting firmness in the trend. So gold has to sustain above the key resistance of Rs 48500 to extend its gain and move towards the next objective at Rs 48950. So for the day, price is expected to move in the range of Rs 47100-48500 with a sideways bias.
Strategy:
Buy MCX Gold June at Rs 48100 with a target of Rs 48450 and a stop loss at Rs 47850.
MCX Silver May futures failed to go beyond the key resistance of Rs 74450 and witnessed decline towards the breakout support near Rs. 72650. Immediate support for price holds around Rs 71780 (8 Day EMA), followed by Rs 70280 (20 Day EMA). Momentum oscillator RSI is holding its ground above 60 (65), that supports the bullish momentum. However, price has to breach the previous top and key resistance of Rs 74450 to regain its momentum. To conclude, we expect silver to trade in the range of Rs 71780-74400 with a sideways bias.
Strategy:
Trading Range for MCX Silver May futures is Rs 71780-74400.
(Ravindra Rao, CMT, EPATVP-Head Commodity Research at Kotak Securities)
