Commodity prices traded firm on Tuesday, after trading mixed in the previous session. On Monday, most of the commodities in the non-agro segment traded positively with a range-bound movement. Bullion prices traded steady in the absence of US markets and a weaker dollar while base metals traded across the spectrum on mixed global cues with Copper being an exception. Crude oil prices gained on stalled OPEC decision on change in output quota. Here is a look at how different commodities are behaving in today’s market.
Outlook: Bullion
Bullion prices traded firm on Tuesday with spot gold price at COMEX was trading 0.43 per cent up near $1799 per ounce while spot silver price at COMEX was trading marginally higher at $26.54 per ounce in the morning trade. The precious metals gained on a weaker dollar which was trading lower by 0.29 per cent at 92.14 in the early trade. Bullion prices gained as US markets resumed after Independence Day Holiday. We expect bullion prices to trade sideways to up for the day.
Trading Strategy:
MCX Gold August resistance for the day lies at Rs. 47700 per 10 grams with support at Rs. 47200 per 10 grams.
MCX Silver September support lies at Rs. 67800 per KG, resistance at Rs. 72500 per KG.
Outlook: Crude Oil
Crude oil prices traded higher on Tuesday as benchmark NYMEX WTI crude oil price rallied above $76 per barrel in the morning trade. Crude oil prices rose after OPEC plus nations failed to reach an agreement on a change in output quota. The OPEC plus talks collapsed on Monday as the United Arab Emirates (UAE) seeks to increase supply against Saudi Arabia’s proposal to keep a tight lid on production. We expect crude oil prices to trade sideways to up for the day.
Trading Strategy:
MCX Crude Oil July support lies at Rs. 5620 per barrel with resistance at Rs. 5760 per barrel.
Outlook: Base Metals
Base metals prices traded firm on Tuesday as most of the metals kept to firm trading range on a weaker dollar. Base metals traded higher despite weak China data which eased the tension of monetary tightening. China is selling copper, aluminum, and zinc from its state reserves via public bidding on Monday and Tuesday in an effort to rein in surging raw-material costs and prevent inflationary pressures from derailing the economic recovery. Base metals may trade sideways to up for the day.
Trading Strategy:
MCX Copper July support lies at Rs. 740 and resistance at Rs. 725.
MCX Zinc July support lies at Rs. 234, resistance at Rs. 242.
MCX Nickel July support lies at Rs. 1340 with resistance at Rs. 1410.
(Tapan Patel is Senior Analyst (Commodities) at HDFC Securities)
By Ravindra Rao
MCX Gold August futures remained in a narrow trading range after testing the higher band of the consolidation range at Rs. 47400. In the previous week, the price has breached the higher end of the consolidation phase but failed to close above the same. So, a sustained move above would push the price towards the next hurdle at Rs. 47700 (20-day EMA), which is the key reversal point for the bulls to take control. On the downside, key support levels exist around Rs. 46900, followed by Rs. 46400.
The rebound in RSI from the oversold zone also strengthened the price rally. But the current reading of RSI (45) is still below the midline of 50, which could worry the bulls. So for the day, the price is expected to trade in the range of Rs. 46900-47700 with a sideways to positive bias. Only close above Rs. 47700 would bring fresh buying interest that might push the price towards Rs. 48000-48200.
Strategy:
Buy MCX Gold August futures at Rs. 47300 with a target price of Rs. 47700 and a stop loss at Rs. 47000.
MCX Silver September futures had erased their earlier gains and closed the day with losses after rallying towards the key resistance near Rs. 70600. Meanwhile, the price has breached the midline of the Bollinger band at Rs. 69650, which has supported the rebound in price from the lower Bollinger band. The immediate support for price holds around Rs. 69200 (8-Day EMA), followed by 61.8 per cent Fibonacci level at Rs. 67800. Immediate resistance is seen around Rs. 71300, followed by Rs. 72600.
The momentum indicator RSI is supporting the bulls, as it has moved above the 50-mark (52). But it has to sustain above the 50-mark to bring further strength in the rally. So for the day, the price is likely to move in the range of Rs. 8900-71300 with a sideways to positive bias.
Strategy:
Buy MCX Silver September futures at Rs. 69500 with a target price of Rs. 71200 and a stop loss at Rs. 68900.
(Ravindra Rao, CMT, EPAT is VP-Head Commodity Research at Kotak Securities)
