Tuesday, November 30, 2021
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Commodity strategies: Gold, silver, crude, base metals

Ravindra Rao

Gold futures witnessed decline towards the lower band of the broad consolidation range at Rs 45,800-46,600 during the last trading day of the week. The zone continues to offer support, and therefore if the price breaks down below that, it could open a downside towards Rs 45,300. On the other hand, a move above Rs 46,600 would increase the hopes of a reversal of the bearish trend and price would rise towards Rs 47,000. On the oscillator front, RSI (at 39) is hovering below the neutral zone, indicating a weaker bias. So in the near-term, the price is expected to consolidate in a wide range of Rs 45,800-46,600 with a sideways bias. A break on either side of the range would give a clear direction to the trend.

Trading Range: Rs 45,800-46,600

MCX Silver futures moved lower on Friday and came close to the key support zone near Rs 59,200, where the lower Bollinger band (-2 SD) restricted its downside. The previous low and the lower Bollinger band at Rs 59,200 would act as key support as price has formed a multiple support zone. On the upside, the key resistance for price stood at Rs 61,675. A sustained move above Rs 61,675 might bring fresh buying interest and that would push the price towards the next target resistance at Rs 62,500. Meanwhile, the price is hovering near the lower bound of the downward sloping channel, which also supports the limited downside in price. The short-term momentum has turned positive as the fast stochastic has generated a crossover buy signal. Meanwhile, RSI on the daily charts is hovering near 35, which suggests a bearish bias. However, positive divergence in RSI would support the bulls to take control. So for the day, the price might consolidate in the band of Rs 59,200-61,675 with a sideways bias. Either side break of the range would bring more clarity in the trend.

Trading Range: Rs 59,200-61,675

(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 Monday with spot gold prices at COMEX up half a percent near $1,759 per ounce while spot silver prices at COMEX rose by more than 1% near $22.69 per ounce in morning trade. The precious metals pared some of the previous loses with gold fluctuating near $1,750 per ounce on Fed tapering jitters and rise in US bond yields. The US 10-year treasury yields rose to 1.45% during the week, lowering demand for safe haven assets. Bullion prices traded higher on Monday supported by a weaker dollar. Bullion prices have capped upside post Fed comments to unwind pandemic-related stimulus and to raise key interest rates by end of 2022. Bullion prices may trade sideways to down for the day.

Trading Strategy: MCX Gold October resistance for the day lies at Rs 46,300 per 10 gram with support at Rs 45,800 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 higher on Monday with benchmark NYMEX WTI crude oil prices up 1.46% up near $75.06 per barrel in morning trade. Crude oil prices continued upside on supply crunch with output disruptions and higher demand. OPEC plus nations are struggling to meet raised output quota due to maintenance work. Lower supply from Gulf of Mexico has led to large weekly inventory drawdowns to respond to higher demand for oil to replace costly natural gas and coal. We expect crude oil prices to trade up for the day.

Trading Strategy: MCX Crude Oil October support lies at Rs 5,380 per barrel with resistance at Rs 5,590 per barrel.

Outlook: Base Metals
Base metals prices traded mixed with firm trading in most of the metals. Base metals are supported by lower supply concerns while looming worries over China’s Evergrande crisis has capped upside. Copper inventories at Shanghai fell by 9,712 tonnes last week while zinc and aluminium reported rise in weekly stockpiles. However, US Fed tapering signals has also raised questions on demand recovery as economies are growing slowly. Base metals may trade sideways to up for the day.

Trading Strategy: MCX Copper October support lies at Rs 712 and resistance at Rs 725. MCX Zinc October support lies at Rs 258 resistance at Rs 265. 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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