Commodity prices traded mixed on Wednesday after firm trading in the previous session. On Tuesday, bullion prices extended gains while base metals witnessed recovery in the evening session boosted by a weaker dollar. Crude oil prices traded steadily in the upper range along with development in Iran nuclear talks. The dollar index fell to the lower levels since January losing 0.23 per cent for the day. 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 were trading near $1906 per ounce while spot silver prices at COMEX were trading over half a percent up at $28.15 per ounce in the morning trade. The precious metals edged higher as gold rallied above $1900, breaking out of the psychological resistance level on inflation worries. The dollar index fell to its lowest level since January while US 10 year treasury yields fell to 1.55 per cent, boosting buying in precious metals. The fall in Bitcoin also supported buying in bullion with investors switching to safer assets. We expect bullion prices to trade up for the day.
Trading Strategy:
MCX Gold June resistance for the day lies at Rs. 49200 per 10 grams with support at Rs. 48700 per 10 grams.
MCX Silver July support lies at Rs. 71200 per KG, resistance at Rs. 74000 per KG.
Outlook: Crude Oil
Crude oil prices traded weak with benchmark NYMEX WTI crude oil prices were trading 0.24 per cent down near $65.91 per barrel in the morning trade. Crude oil prices remain fluctuated ahead of weekly inventory data and ongoing Iran nuclear talks. The traders and investors remained vary on mixed fundamentals which have kept oil prices in a range. A weaker dollar and broad buying in commodities have supported oil prices while the expectation of bullish weekly inventory data may side-line Iranian supply pressure. We expect crude oil prices to trade sideways to up for the day.
Trading Strategy:
MCX Crude Oil June support lies at Rs. 4750 per barrel with resistance at Rs. 4890 per barrel.
Outlook: Base Metals
Base metals prices traded firm on Wednesday as most of the metals gained in the opening trade. Base metals prices traded higher supported by a weaker dollar and Fed comments. The US Fed smoothened inflation worries terming it transitory. Copper prices traded higher on supply disruption fears from Chile. Workers at BHP Group’s remote operations center in top copper producer Chile rejected the company’s latest wage offer and will begin a strike on Wednesday. Base metals are expected to trade sideways to up for the day.
Trading Strategy:
MCX Copper June support lies at Rs. 739 and resistance at Rs. 754.
MCX Zinc June support lies at Rs. 231, resistance at Rs. 237.
MCX Nickel June support lies at Rs. 1240 with resistance at Rs. 1280.
(Tapan Patel is Senior Analyst (Commodities) at HDFC Securities)
By Ravindra Rao
MCX Gold June futures have erased all their losses and closed at the higher end of the consolidation range Rs. 48150-48900 amid dovish Fed comments. Key support for the day is at Rs. 48415 followed by Rs. 48150. On the upside Rs. 48950 (61.8 per cent Fibonacci level) holds initial resistance, followed by Rs. 49250. The gain in the strength index has also strengthened the bull case in Gold. Price has to move beyond Rs. 48950 to resume its uptrend towards Rs. 49250, followed by Rs. 49550. For the day, the price is expected to move in the range of Rs. 48415-49250 with a sideways to a bullish bias. Only close below Rs. 48150 would change the trend to neutral.
Strategy:
Buy MCX Gold June at Rs. 48650 with a target price of Rs. 49250 and a stop loss at Rs. 48400.
MCX Silver July futures witnessed a quick rebound from the key support of Rs. 70900 (Mid Line of Bollinger Band) and closed above the 8-day EMA. Price also got support from the lower band of the bullish trend channel and strong RSI. RSI on the daily charts is hovering around the 60-mark supporting the bull case. The key resistance for July future exists around Rs. 73300, followed by Rs. 74450 (Previous Top). As long as the Rs. 70900-70600 zone holds price is expected to test the higher band of the range near Rs. 74450. Hence, we expect silver to trade in the range of Rs. 70900-74400 with a sideways to positive bias.
Strategy:
Buy MCX Silver July at Rs. 71900 with a target price of Rs. 73300 and a stop loss at Rs. 70900
(Ravindra Rao, CMT, EPAT is VP-Head Commodity Research at Kotak Securities)
