Commodity prices traded mixed on Wednesday as bullion traded with cuts while crude oil moved up and base metals traded weak, continuing the mixed trading outlook from Tuesday’s session on strong equity rally globally. The US bond yields rallied while dollar index recovered marginally for the day. Here is a look at how different commodities are behaving in today’s market.
Outlook: Bullion
Bullion prices traded weak with spot gold price at COMEX was trading near $1,793 per ounce while spot silver price at COMEX was trading marginally up near $27.31 per ounce in the morning trade. Bullion prices traded under pressure with rise in bond yields as vaccine rollouts boosted economic growth optimisms. The risk on sentiments drove investors out of precious metals. The ETF gold holdings at SPDR gold share fell to 1136.68 tonnes from 1142 tonnes. We expect bullion prices to trade sideways to down for the day.
Trading Strategy:
MCX Gold April resistance for the day lies at Rs. 47,200 per 10 grams with support at Rs. 46,600 per 10 grams.
MCX Silver March support lies at Rs. 68,000 per KG, resistance at Rs. 71,000 per KG.
Outlook: Crude Oil
Crude oil prices traded higher with benchmark NYMEX WTI crude oil prices were trading above $60 per barrel in the morning trade keeping the firm trading range. Crude oil prices traded up on hopes over fuel demand recovery and lower supply expectations due to cold snap in Texas. The upside remained capped for crude oil due to dollar recovery, keeping prices to marginal gains. Crude oil prices are expected to trade sideways to up for the day.
Trading Strategy:
MCX Crude Oil February support lies at Rs. 4,320 per barrel with resistance at Rs. 4,430 per barrel.
Outlook: Base Metals
Base metals complex traded weak as most of the metals were trading off the recent highs. Nickel prices traded under pressure on inventory build in LME while Copper and Zinc traded in the red on stronger dollar. The rally in equity indices and vaccine rollouts may keep investment sentiments high in base metals. Base metals are expected to trade sideways to up for the day.
Trading Strategy:
MCX Copper February support lies at Rs. 642 and resistance at Rs. 648.
MCX Zinc February support lies at Rs. 225, resistance at Rs. 230.
MCX Nickel February support lies at Rs. 1,340 with resistance at Rs. 1,370.
(Tapan Patel is a Senior Analyst (Commodities) at HDFC Securities)
By Ravindra Rao
MCX Gold April futures witnessed sharp decline as price failed to move above the 5 day EMA (47,480) and breached the key support of Rs 46,960. Meanwhile, key support for April futures holds around Rs 46,600-46,500 zone (previous bottom and trend line support). On the other hand, key resistance exists around Rs 47,290 (5 DEMA), followed by Rs 47,500. However, price is still moving inside the downward sloping channel with channel resistance near Rs 47,600. So price needs to sustain above the channel resistance to turn bullish. On the momentum front, RSI is hovering around 31, suggesting sideways to the weaker bias. Going by the above analysis price is expected to move in the band of Rs 46,500-47,300 with sideways to downside bias.
Strategy:
Sell MCX Gold April at Rs 47,180 with a target of Rs 46,650 and a stop loss at Rs 47,500.
MCX Silver March futures held the key support of 21 day EMA near Rs 68,400 as price witnessed a sharp decline from the resistance zone of Rs 70,760. Meanwhile, price is hovering above the bullish crossover of 5 and 21 day EMA which has supported the recovery in price. Price is still moving inside the rising channel with RSI at 53 suggesting sideways trend. However, it needs to sustain above to rebuild the strength. Below Rs 68,400, next key support exists around Rs 67,200 (50 DEMA and lower band of the upward channel). However on the upside, key resistance exists around Rs 70,760, followed by Rs 71,600. So for the day price is expected to move in the range of Rs 68,400-70,760 with a sideways bias.
Strategy:
Sell MCX Silver March at Rs 69,850 with a target of Rs 68,500 and a stop loss at Rs 70,850.
(Ravindra Rao is VP-Head Commodity Research at Kotak Securities)
