Gold Dec futures initially tried to move higher during yesterday’s trading session but gave back the gains and declined below the key support at Rs 45,800, suggesting a sign of weakness. The downward trend channel in gold is still in place as the price is moving lower with formation of lower lows. The next support for price holds around Rs 45,300, which could be the target/support for the day. On the upside, 8-day EMA (Rs 462,00) is the initial hurdle for price followed by Rs 46,600 (20-DEMA). The medium-term momentum has turned negative as the MACD index has generated a crossover signal. To conclude, price is expected to consolidate in a wide range of Rs 45,300-46,200 with a sideways to lower bias.
Trading Range: Rs 45,300-46,200
MCX Silver futures also witnessed a sharp decline as the dollar surged to a 12-month high on Wednesday. Meanwhile, the lower band of the consolidation has been broken as price moved below Rs 59,200, suggesting a weaker bias in price trend. The formation of a bearish continuation pattern (Bearish Pennant) has strengthened the weakness in the trend. Now, the price is hovering near the lower band support of the downward sloping channel at Rs 58,000, which could limit the downside. However, a move below would weaken the trend towards Rs 57,500. On the upside, key resistance exists around Rs 59,200, followed by Rs 60,650 (8-DEMA). Meanwhile, RSI on the daily charts is hovering near 30, which suggests a bearish bias. Hence, any rise towards the resistance zone would attract selling.
Trading Strategy: Sell MCX Silver Dec at Rs 59,200. Target: Rs 57,500. Stop loss: Rs 60,600
(Ravindra Rao is VP-Head Commodity Research at Kotak Securities Ltd. Views are his own)
Here is a look at how different commodities are behaving in today’s market.
Bullion prices traded steady on Thursday with spot gold prices at COMEX up 0.39% near $1,732 per ounce while spot silver prices at COMEX marginally up near $21.56 per ounce in morning trade. The precious metals traded under pressure with dollar rally and US Fed tapering expectations. The dollar index rose to a 11-month high, weighing demand for precious metals. The recent hint from US Fed chairman has increased chances of some timeline to end asset purchase program in November meeting. Bullion prices may trade sideways to down for the day.
Trading Strategy: MCX Gold December resistance for the day lies at Rs 46,200 per 10 gram with support at Rs 45,700 per 10 gram. MCX Silver December support lies at Rs 56,800 per kg, resistance at Rs 61,000 per kg.
Outlook: Crude Oil
Crude oil prices traded weak on Thursday with benchmark NYMEX WTI crude oil prices down 0.08% down near $74.77 per barrel in morning trade. Crude oil prices extended loses with rise in weekly inventories. The US EIA data showed that crude oil inventories were up by 4.6 million barrels in the week against expectations of rose of 1.7 mb. The rally in dollar index and broad selling in commodities also kept oil prices lower for the day. We expect crude oil prices to trade sideways to down for the day.
Trading Strategy: MCX Crude Oil October support lies at Rs 5,480 per barrel with resistance at Rs 5,620 per barrel.
Outlook: Base Metals
Base metals traded mixed with most of the metals in firm trading after falling on stronger dollar. Nickel prices were up by 0.50% in the morning trade while Zinc prices were trading in red. Base metals may get some support from positive China manufacturing data. The China Caixin/Markit Manufacturing Purchasing Managers’ Index (PMI) rose to 50.0 in September from 49.2 the month before. China’s electricity shortage on the consumption and production of raw materials is still a concern for global market. Power curbs in China has led to lower demand for industrial metals with restricted operating activities. Base metals may trade sideways to down for the day.
Trading Strategy: MCX Copper October support lies at Rs 708 and resistance at Rs 718. MCX Zinc October support lies at Rs 254, resistance at Rs 260. MCX Aluminium September support lies at Rs 229 with resistance at Rs 237.
(Tapan Patel is Senior Analyst, Commodities, HDFC Securities. Views are his own)