Commodity prices traded lower on Monday with bullion prices extending losses on Fed tapering expectations. Base metals and crude oil prices traded lower on demand growth worries on rising virus cases and China curbs. The broad strength in the dollar index kept pressure on commodities. 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 prices at COMEX trading near $1,734 per ounce while spot silver prices at COMEX trading over half a percent up at $23.60 per ounce in morning trade. The precious metals rebounded from recent lows but were still trading near five-month lows on heightened market expectations of Fed tapering and a stronger dollar. The dollar index traded near three-week high on follow-up buying after Friday’s strong US job numbers. Gold prices have respected strong support range of $1,670-1,680 while silver got support from strong base metals. We expect bullion prices to trade sideways to down for the day.
Trading Strategy: MCX Gold October resistance for the day lies at Rs 46,300 per 10 gram with support at Rs 45,700 per 10 gram. MCX Silver September support lies at Rs 62,000 per kg, resistance at Rs 64,800 per kg.
Outlook: Crude Oil
Crude oil prices traded firm on Tuesday with benchmark NYMEX WTI crude oil prices trading 0.48% up near $66.80 per barrel in morning trade. Crude oil prices recovered from recent lows witnessing short recovery. Earlier, crude oil prices traded lower on weaker demand outlook over rising virus cases and possible restrictions. China on Monday imposed some COVID curbs after it reported more COVID-19 infections in the latest outbreak of the disease that was first detected in the country in late 2019. We expect crude oil prices to trade sideways to down for the day.
Trading Strategy: MCX Crude Oil August support lies at Rs 4,910 per barrel with resistance at Rs 5,060 per barrel.
Outlook: Base Metals
Base metals prices traded firm on Tuesday with most of the metals covering previous losses despite demand worries. Base metals traded under pressure amid concerns that a resurgence in the fast spreading delta virus variant may derail demand in top consumer China. Copper prices relieved some tensions as workers and management at Escondida agreed to extend mediated talks for another day in an effort to avert a strike at the world’s biggest copper mine. Base metals may trade sideways to up for the day.
Trading Strategy: MCX Copper August support lies at Rs 725 and resistance at Rs 734. MCX Zinc August support lies at Rs 242, resistance at Rs 248. MCX Nickel August support lies at Rs 1,410 with resistance at Rs 1,460.
(Tapan Patel is Senior Analyst (Commodities), HDFC Securities. Views are his own)
