Commodity prices traded with cuts on Friday continuing the weaker trend from the previous session. Base metals traded strong on higher demand optimism. Bullion prices pared early gains with rise in bond yields despite of dollar decline. The dollar index ended down by 0.39 per cent for the day. Here is a look at how different commodities are behaving in today’s market.
Outlook: Bullion
Bullion prices traded lower with spot gold price at COMEX was trading near $1,767 per ounce while spot silver price at COMEX was trading 1 per cent down at $26.72 per ounce in the morning trade. Bullion prices pared previous gains and reported sixth straight decline on Thursday. Precious metals traded under pressure with rise in bond yields which dampened demand for safe haven. The risk on sentiments drove investors out of precious metals with Gold ETF holdings at SPDR gold shares falling to 1,132 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. 45,700 per 10 grams with support at Rs. 46,200 per 10 grams.
MCX Silver March support lies at Rs. 66,000 per KG, resistance at Rs. 69,000 per KG.
Outlook: Crude Oil
Crude oil traded down with benchmark NYMEX WTI crude oil prices were trading nearly 1.54 per cent down falling below $60 per barrel in the morning trade. Crude oil prices pared weekly gains as cold snap in US has shut demand from refiners putting pressure on crude oil inventories. The cold snap in Texas has shut some of oil refining facilities limiting the demand. Crude oil prices are expected to trade down for the day.
Trading Strategy:
MCX Crude Oil March support lies at Rs. 4,290 per barrel with resistance at Rs. 4,420 per barrel.
Outlook: Base Metals
Base metals complex traded mixed as most of the metals pared previous gains with broad selling in commodities due to dollar strength and surge in bond yields. Copper prices traded off the nine years highs as supply deficit fears continued to boost buying. Copper inventories at LME are near their lowest since 2005 at 76,025 tonnes and the premium for cash in copper over three-month is rising showing tight supply in spot market. We expect base metals to trade sideways to down for the day.
Trading Strategy:
MCX Copper February support lies at Rs. 654 and resistance at Rs. 659.
MCX Zinc February support lies at Rs. 230, resistance at Rs. 236.
MCX Nickel February support lies at Rs. 1,360 with resistance at Rs. 1,410.
(Tapan Patel is a Senior Analyst (Commodities) at HDFC Securities)
By Ravindra Rao
MCX Gold April future is hovering around the long term trend line support near Rs 46,200 as it failed to hold the key support of Rs 46,600. Meanwhile key resistance for April futures exists around Rs 46,600 (previous bottom), MCX GOLD April future weakened further and hit the key support zone near Rs 46,000. Price is still hovering in the downward sloping channel with higher bound resistance near Rs 47,000, suggesting bearishness in price trend. Meanwhile, key resistance for April futures exists around Rs 46,600 (previous bottom), followed by Rs 46,800. On the other hand, key support holds around Rs 45,660, followed by Rs 45,400. On the momentum front, RSI is hovering around 24, suggesting a weaker trend but is also in the oversold zone that could limit further downside in price. Going by the above analysis price is expected to move in the band of Rs 45,660-46,600 with sideways to downside bias.
Strategy:
Sell MCX Gold April at Rs 46,150 with a target of Rs 45,660 and a stop loss at Rs 46,500.
MCX Silver March futures is moving near the lower band of the consolidation range of Rs 68,200-70,760. The lower band of the range got support from 21 day EMA near Rs 68,400 and higher band resistance is from its previous top. A move below the key support Rs 68,200 would extend the downside in March futures towards the next key support at Rs 67,200 (50 DEMA), followed by Rs 66,400. On the upside, Rs 69,700 holds immediate resistance followed by Rs 70,760. Meanwhile RSI is hovering near 48 suggesting a sideways trend. For the day price is expected to move in the range of Rs 67,200-69,700 with sideways trend.
Strategy:
Sell MCX Silver March at Rs 68,800 with a target of Rs 67,200 and a stop loss at Rs 69,800.
(Ravindra Rao is VP-Head Commodity Research at Kotak Securities)
