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Commodity strategies: Gold, silver, crude, base metals

Ravindra Rao

MCX Gold futures pulled back during Wednesday’s trading session as it faced stiff resistance at its 50-DEMA at Rs 47,280. It seems the price is in a consolidation as the range of Rs 46,620-47,600 is yet to be breached decisively. For the day, Rs 47,280 is the key resistance, followed by Rs 47,600. Similarly, on the downside Rs 46,700 (-2 SD) lower Bollinger band would act as key support, followed by Rs 46,620. The momentum oscillator RSI (46) is hovering around the neutral zone (50), suggesting a sideways trend. On the other hand, the rebound in fast stochastic from the oversold territory has negated bearish bets. So for the day, the price is expected to move in the range of Rs 46,700-47,280 with a sideways bias. Only a close above Rs 47,280 would extend the upside towards the next key resistance at Rs 47,600.

Trading Range: Buy MCX Gold Oct at Rs 46,800. Target price: Rs 47,280. Stop loss: Rs 46,600

MCX Silver futures remained in a sideways range on Wednesday. Price tried to reach the key resistance of Rs 64,000 (20-DEMA), but failed to hold its gains and ended the day on the losing side. If price manages to settle above this level (Rs 64,000), it will head towards the next resistance at Rs 65,500, followed by Rs 66,000. On the downside, the immediate support exists around Rs 62,400, which is the key level for the day. A move below would weaken the trend again and push the price towards Rs 61,800-61,200 zone. On the momentum front, the RSI is hovering near 45, suggesting a sideways bias. So for the day, the price might consolidate in the band of Rs 62,400-64,000. Only a sustained move above Rs 64,000 would bring fresh buying interest in silver futures and push it towards Rs 65,500.

Trading Range: Rs 62,400-64,000

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

Tapan Patel
Commodity prices traded mixed on Wednesday with selling in bullion following strong US data. Base metals traded higher supported by positive global cues and strong US empire manufacturing data. Crude oil prices rallied by more than 3% on higher demand and lower supply situation with bullish inventory data. The dollar index ended marginally down near 92.55 for the day. Here is a look at how different commodities are behaving in today’s market.

Outlook: Bullion
Bullion prices traded steady on Thursday with spot gold prices at COMEX flat near $1,791 per ounce while spot silver prices at COMEX near $23.80 per ounce in morning trade. The precious metals traded weak with gold prices below $1,800 per ounce in the previous session with a rally in US bond yields. Strong economic data ahead of Fed meeting next week is raising speculation amongst investors over early Fed tapering. Bullion prices may trade sideways to down for the day.

Trading Strategy: MCX Gold October resistance for the day lies at Rs 47,200 per 10 gram with support at Rs 46,700 per 10 gram. MCX Silver December support lies at Rs 62,000 per kg, resistance at Rs 64,500 per kg.

Outlook: Crude Oil
Crude oil prices traded higher on Thursday with benchmark NYMEX WTI crude trading 0.22% up near $72.77 per barrel in morning trade. Crude oil prices extended previous gains on larger than expected inventory drawdown and lower supply concerns. The US EIA showed that inventories fell by 6.4 million barrels in the week to Sept. 10 to 417.4 million barrels. About 30% of US Gulf production remained shut as of Wednesday, according to the Bureau of Safety and Environmental Enforcement. We expect crude oil prices to trade sideways to up for the day.

Trading Strategy: MCX Crude Oil September support lies at Rs 5,270 per barrel with resistance at Rs 5,390 per barrel.

Outlook: Base Metals
Base metal prices traded weak in opening trade on Thursday with nickel and copper falling the most followed by aluminium and zinc. Base metals traded under pressure after China announced to release more supply form state reserves to balance the market. Aluminium prices may continue upside on strong fundamentals with supply concerns from China while copper and nickel prices may follow weak Asian cues. Base metals may trade sideways to down for the day.

Trading Strategy: MCX Copper September support lies at Rs 725 and resistance at Rs 735. MCX Zinc September support lies at Rs 250, resistance at Rs 256. MCX Aluminium September support lies at Rs 224 with resistance at Rs 232.

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

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