Commodity prices traded lower with most of the commodities in the non-agro segment witnessed selling except Crude oil. Silver prices retreated from recent highs on higher margins while crude oil prices continued to soar on supportive fundamentals. The dollar index continued to weigh on commodity prices which gained by 0.24 per cent for the day. Here is a look at how different commodities are behaving in today’s market.
Outlook: Bullion
Bullion prices traded steady with spot gold prices at COMEX was trading at $1,841 per ounce, regaining some strength while spot silver prices at COMEX was trading up by 1 per cent to $26.95 per ounce after shedding more than 8 per cent in the previous session. Bullion prices are trading under pressure on stronger dollar and rally in equity indices. The legislative hurdle to pass Biden’s $1.9 trillion stimulus package has capped the upside in precious metals. We expect bullion prices to trade sideways to down for the day.
Trading Strategy:
MCX Gold April resistance for the day lies at Rs. 48,400 per 10 grams with support at Rs. 47,600 per 10 grams. MCX Silver March support lies at Rs. 67,000 per KG, resistance at Rs. 72000 per KG.
Outlook: Crude Oil
Crude oil prices continued upside move with benchmark NYMEX WTI crude oil prices were trading 0.42 per cent up to $55 per barrel on Wednesday. Crude oil prices are trading higher on supply deficit concerns despite of slow demand recovery on producers pledge to cut oil output. Crude oil prices gained after API report showed decline in US weekly oil inventories by 4.26 mb ahead of official data form EIA. Crude oil prices are expected to trade sideways to up for the day on positive global cues.
Trading Strategy:
MCX Crude Oil February support lies at Rs. 3,940 per barrel with resistance at Rs. 4,080 per barrel.
Outlook: Base Metals
Base metals complex continued muted trading on slower demand from China ahead of Lunar day holidays. The seasonal holiday effect on manufacturing activities has lowered demand outlook for short term. The slower pace of economic recovery and cash squeeze may limit the upside in base metals till mid-February. Base metals are expected to trade sideways to down for the day.
Trading Strategy:
MCX Copper February support lies at Rs. 585 and resistance at Rs. 592. MCX Zinc February support lies at Rs. 201, resistance at Rs. 209. MCX Nickel February support lies at Rs. 1,260 with resistance at Rs. 1,295.
(Tapan Patel is a Senior Analyst (Commodities) at HDFC Securities)
By Ravindra Rao
MCX Gold April future weakened further as price failed to hold the support of 200 day EMA at Rs 48,500. Meanwhile key support for April future exists around Rs 47,500 (Previous Bottom), followed by Rs 47,200. On the upside Rs 48,500 is the key resistance. On the momentum front, RSI is trading around 30, suggesting weakness in trend. However, the oversold condition might limit further downside in gold prices. For the day, price is likely to continue trade in the broad range of Rs 47,500-48,500 with sideways bias. Only a sustained move below Rs 47,500 would extend downside towards Rs 47,200.
Strategy:
Buy MCX Gold April at Rs 47,800 with a target of Rs 48,400 and a stop loss at Rs 47,450.
MCX Silver March futures has erased its earlier gains and hit the key support (21 Day EMA) at Rs 67,500. Meanwhile, price is still trading in the broad rising trend channel with lower bound support near Rs 66,400, followed by Rs 65,050 (Recent Bottom). On the other hand, key resistance exists around Rs 71,700. On the momentum front RSI has moved towards the midline (50) after hitting the overbought zone. This suggests the price could go further under consolidation before moving higher. So for the day price is expected to move in the range of Rs Rs 66,400-71,700 with a sideways trend. Only a close below Rs 65,050 would change the trend to neutral.
Strategy:
Buy MCX Silver March at Rs 67,500 with a target of Rs 70,400 and a stop loss at Rs 66,200.
(Ravindra Rao is VP-Head Commodity Research at Kotak Securities)
