Wednesday, October 20, 2021
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Commodity strategies: Gold, silver, crude, base metals

Ravindra Rao

Gold Dec futures moved higher for the 3rd consecutive day in a row after reversing earlier losses. The price has moved above the 20-day EMA resistance and its previous high of Rs 46,800, suggesting a short-term reversal. However, price is still trading below the key resistance of the downward sloping trend line resistance at Rs 47,000, which could be the resistance for the day. Therefore, a trade through the key resistance of Rs 47,000 will change the main trend to positive and push the price towards the next resistance at Rs 47,360. On the lower end, the immediate support is at Rs 46,550 (20-DEMA) followed by Rs 46,200. The reversal in the oscillator has strengthened the rebound in price as RSI has moved above the neutral zone (at 56). Moreover, positive divergence in RSI has supported the bull case. So for the day, the price is expected to consolidate in the wide range of Rs 46,200-47,000 with a sideways to positive bias. Only a close above Rs 47,000 would attract fresh buying.

Trading Strategy: Buy MCX Gold Dec at Rs 46,550. Target: Rs 47,000 Stop loss: Rs 46,200

MCX Silver futures also followed the path of the yellow metal and rallied towards its key resistance zone near Rs 61,200 (20-DEMA). The next key resistance for price exists around Rs 61,670. The price has to move above Rs 61,670 to reverse the bearish trend. In broader terms, the trend in silver is still on the bearish side as price is trading inside a downward sloping trend channel with a higher bound resistance near Rs 63,300 and lower bound support near Rs 58,200. On the oscillator front, RSI has reversed its earlier losses and moved towards the neutral zone at 50 (48), supporting the recovery in price. However, it has to sustain above the 50 mark to bring a firmness in the momentum. Hence, price has to move above the resistance of Rs 61,670 to register a reversal. Until then, it might consolidate in the broad range of Rs 61,670-59,000 with a sideways bias.

Trading Range: Rs 59,000-61,670

(Ravindra Rao is CMT, EPAT, VP-Head Commodity Research, Kotak Securities Ltd. Views are his own)

Tapan Patel

Here is a look at how different commodities are behaving in today’s market.

Outlook: Bullion
Bullion prices traded weak on Tuesday with spot gold prices at COMEX down half a percent near $1,759 per ounce while spot silver prices at COMEX were down 1% near $22.41 per ounce in morning trade. Bullion pared previous gains on a stronger dollar. The dollar index rose by 0.25% in morning trade, lowering demand for the safe haven. Earlier, bullion prices gained on inflation worries with power shortage and rising energy costs. Bullion prices may trade sideways to down for the day.

Trading Strategy: MCX Gold December resistance for the day lies at Rs 46,900 per 10 gram with support at Rs 46,500 per 10 gram. MCX Silver December support lies at Rs 59,000 per kg and resistance at Rs 61,800 per kg.

Outlook: Crude Oil

Crude oil prices traded firm on Tuesday with benchmark NYMEX WTI crude oil prices down 0.10% down near $77.72 per barrel in morning trade. Crude oil prices extended gains, rallying to three-year highs on fear of lower supply post OPEC plus decision. The OPEC+ said on Monday it would maintain an agreement to increase oil production only gradually, ignoring calls from the United States and India to boost output as the world economy recovers. We expect crude oil prices to trade sideways to up for the day.

Trading Strategy: MCX Crude Oil October support lies at Rs 5,720 per barrel with resistance at Rs 5,850 per barrel.

Outlook: Base Metals
Base metals prices traded mixed on Tuesday with most of the metals down marginally, except aluminium. Base metals fluctuated on supportive US data and China demand worries. China is grappling with an energy crunch that has roiled markets and saw its factory sector contracting in September for the first time since the pandemic began. Aluminium prices may get support from lower output from China over government curbs. Base metals may trade sideways to up for the day.

Trading Strategy: MCX Copper October support lies at Rs 709 and resistance at Rs 720. MCX Zinc October support lies at Rs 252, resistance at Rs 260. MCX Aluminium September support lies at Rs 231 with resistance at Rs 235.

(Tapan Patel is Senior Analyst, Commodities, HDFC Securities. Views are his own)

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