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

Ravindra Rao

Gold Dec futures moved in a sideways range on Tuesday after breaching the key resistance of Rs 46,800 on Monday. The price has moved above the 20-day EMA resistance and its previous high of Rs 46,800, suggesting a short-term reversal. However, it 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 52). Moreover, positive divergence in RSI has supported the bull case. So for the day, price is expected to consolidate in a wide range of Rs 46,200-47,000 a with 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 remained in a tight range on Tuesday ahead of this week’s US job numbers. Price is hovering near the key resistance of 20-day EMA at Rs 61,200. The next key resistance for price exists around Rs 61,670. 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 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. However, it has to sustain above 50 mark to bring firmness in the momentum. Hence, price has to move above the resistance at Rs 61,670 to register a reversal. Until then, it might consolidate in a 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 Wednesday with spot gold prices at COMEX down 0.39% near $1,753 per ounce while spot silver prices at COMEX down 0.81% down near $22.42 per ounce in morning trade. Bullion prices traded lower with firm dollar and rally in US bond yields. The US 10-year treasury yields were trading 2.28% up near 1.56% for the day, pressuring bullion prices. Precious metals also got support from inflation worries over higher 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 46,400 per 10 gram. MCX Silver December support lies at Rs 59,000 per kg, resistance at Rs 61,800 per kg.

Outlook: Crude Oil
Crude oil prices traded weak on Wednesday with benchmark NYMEX WTI crude oil prices flat near $78.97 per barrel in morning trade. Crude oil prices rose for the fifth consecutive day, rallying to the highest level since 2014. Crude oil prices traded up on lower supply worries and rising energy prices including natural gas and coal. Crude oil prices capped upside with rise in weekly inventories. The US API data showed that oil stockpiles rose by 0.95 mb in last week. We expect crude oil prices to trade sideways to up for the day.

Trading Strategy: MCX Crude Oil October support lies at Rs 5,840 per barrel with resistance at Rs 5,960 per barrel.

Outlook: Base Metals
Base metals traded under pressure on higher inflation concerns and lower demand from China over power shortage. China is grappling with an energy crunch that has roiled the metals market with several shut downs from producers and manufacturers. Aluminum prices may get support from lower output from China over government curbs. Base metals may trade sideways to down for the day.

Trading Strategy: MCX Copper October support lies at Rs 702 and resistance at Rs 710. MCX Zinc October support lies at Rs 254, 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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