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Commodity strategies: Gold, silver, crude, base metals

Ravindra Rao

Gold futures failed to move above the higher bound of the consolidation range at Rs 47,020-47,700 on a couple of occasions on Tuesday suggesting a sideways trend. The bullish crossover of 8- and 20-day EMA has supported the bullish bias. Now as per the oscillators (RSI at 58), price has moved out of the oversold zone and is placed above the neutral zone, which supports sideways to higher momentum. The MACD histogram is in the positive territory but the upward sloping trajectory is decelerating, which points to consolidation. To conclude, price is likely to consolidate in the wide range of Rs 47,020-47,700 with a sideways bias. Only a close below Rs 47,020 would extend the weakness towards Rs 46,600-46,500 zone. On the flipside, a move above Rs 47,700 would push the price towards Rs 48,000.

Trading Range: Rs 47,020-47,700

MCX Silver prices moved higher on Tuesday and hit the 200-day EMA resistance at Rs 65,200. Now the next key target for price is at Rs 65,800, which is the previous top of downward trend channel. Price has to move above Rs 65,800 to resume the rally towards the next hurdle at Rs 66,650. The bullish crossover of 8- and 50-DEMA has strengthened the rally along with the breakout of the regression channel, which has fueled the bullish momentum. On the oscillator front, fast stochastic is hovering in the overbought zone, which could bring profit booking at higher levels. From the above analysis, we expect the price to trade in the range of Rs 63,200-65.800 with a sideways to higher bias. A closing above Rs 65,800 may intensify the bullish momentum towards Rs 66,650.

Trading Range: Buy MCX Silver Dec at Rs 64,000. Target: Rs 65,500. Stop loss: Rs 63,200

(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 firm on Wednesday with spot gold prices at COMEX marginally up near $1,774 per ounce. Spot silver prices at COMEX rose by 0.38% near $23.74 per ounce. Bullion prices kept upper trading range, limiting gains on higher US bond yields. The 10-year US bond yields rose to 1.65% ahead of speculation on sooner Fed tapering. Bullion prices are supported by global inflation worries on power shortages. Bullion prices may trade sideways to up for the day.

Trading Strategy: MCX Gold December resistance for the day lies at Rs 47,600 per 10 gram with support at Rs 47,000 per 10 gram. MCX Silver December support lies at Rs 63,000 per kg, resistance at Rs 65,800 per kg.

Outlook: Crude Oil

Crude oil prices traded weak on Wednesday with benchmark NYMEX WTI crude oil prices down half a percent to $82.02 per barrel in the morning trade. Crude oil prices traded lower on easing coal shortage in China and rise in US stockpiles. The US API data showed that US stockpiles rose by 3.3 mb for the week. The China Electricity Council said late on Tuesday that China’s National Development and Reform Commission (NDRC) discussed government intervention in coal prices at a meeting of key coal producers. Crude oil prices may limit upside with rise in US shale oil production. We expect crude oil prices to trade sideways to down for the day.

Trading Strategy: MCX Crude Oil October support lies at Rs 6,120 per barrel with resistance at Rs 6,270 per barrel.

Outlook: Base Metals

Base metals prices traded weak on Wednesday. Most of the metals pared previous gains. Base metals traded lower on signs of easing coal shortages in China. The Chinese government flagged it was looking for ways to tame record high coal prices and that it would ensure coal mines operate at full capacity as Beijing moved to ease a power shortage. Base metals are surging as global energy crisis deepens the supply crunch and adds to inflation worries. Base metals may trade sideways to down for the day.

Trading Strategy: MCX Copper October support lies at Rs 775 and resistance at Rs 795. MCX Zinc October support lies at Rs 290, resistance at Rs 298. MCX Aluminium September support lies at Rs 240 with resistance at Rs 248.

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

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