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

Ravindra Rao

Gold futures failed to hold its recent gains after the outcome of the FOMC meet. The yellow metal had rallied towards the immediate resistance at its 20-day EMA (Rs 46,830) on Wednesday, which could be the key resistance in near term. The bearish trend channel is still in place along with negative crossover of 20- and 50-day EMA, which might restrict the upside. Immediate support for price holds around Rs 46,100, followed by Rs 45,800. On the oscillator front, RSI (at 45) is hovering below the neutral zone, indicating a weaker bias. So in the near term, the price is expected to move in the wide range of Rs 45,800-46,830 with a sideways to downward bias. Only a close below Rs 45,800 would bring fresh selling interest in gold and the price might slide towards Rs 45,600-45,300 zones.

Trading Strategy: Sell MCX Gold Oct at Rs 46,450. Target at Rs 45,800. Stop loss at Rs 46,830

MCX Silver futures rallied towards its key resistance zone near Rs 61,500, but failed to settle above the midline of the regression channel resistance, suggesting continuation of the weaker bias. The downward sloping channel in silver is in place with support near Rs 60,200 and Rs 59,200, which bears might be eyeing for the day. Meanwhile, RSI on the daily charts is hovering near 40, which suggests a bearish bias. So for the day, the price might consolidate in the band of Rs 59,200-61,500 with a sideways to lower bias. Either side break of the range would bring more clarity in the trend.

Trading Range: Rs 59,200-61,500

(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 Thursday with spot gold prices at COMEX down 0.19% near $1,764 per ounce, while spot silver prices were trading marginally down near $22.62 per ounce in the morning trade. The precious metals pare previous gains after the US Federal Reserve signalled ending of bond buying program in November and possible rate hike by the end of 2022. The dollar index and bond yields were up pressuring bullion prices with higher projections of GDP growth. The China property crisis may lend some support as investors may worry over economic growth and US Fed balance sheet. Bullion prices may trade sideways to down for the day.

Trading Strategy: MCX Gold October resistance for the day lies at Rs 46,800 per 10 gram with support at Rs 46,200 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 firm on Thursday with benchmark NYMEX WTI crude oil prices up 0.14% near $72.33 per barrel in morning trade. Crude oil prices traded higher supported by bullish weekly inventory data and lower supply concerns. The US EIA data showed that US crude stocks fell by 3.84 mb against forecast of 2.44 mb. Crude oil prices were also supported by lower than expected output from OPEC plus nations in the month of August. We expect crude oil prices to trade up for the day.

Trading Strategy: MCX Crude Oil October support lies at Rs 5,270 per barrel with resistance at Rs 5,410 per barrel.

Outlook: Base Metals
Base metals prices traded mixed on Thursday with most of the metals firm in morning trade. Base metals capped upside on dollar recovery on Fed comments of curbing bond buying programme. Aluminium prices extended gains on strong demand and lower supply. Pollution curbs by China impacted aluminium supplies from smelters which has led prices to 2008 highs. Base metals recovered on easing concerns from China’s Evergrande and recovery in equity indices. Base metals may trade sideways to up for the day.

Trading Strategy: MCX Copper September support lies at Rs 708 and resistance at Rs 720. MCX Zinc September support lies at Rs 254 resistance at Rs 262. MCX Aluminium September support lies at Rs 229 with resistance at Rs 236.

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

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