Gold futures moved in a sideways range on Monday, suggesting a phase of consolidation at the lower end of the broad trading range at Rs 45,760-46,600. Price is currently holding onto the support zone near Rs 45,700-45,600. Meanwhile, a sign of positive divergence between RSI and price has supported the price at lower level. However, if price breaks down below Rs 45,700-45,600, then the downside would extend towards Rs 45,300. On the other hand, if price holds the support then it could rise towards the higher end of the consolidation range near Rs 46,600. To conclude, price is expected to consolidate in the wide range of Rs 45,760-46,600 with a sideways bias. A break on either side of the range would give a clear direction to the trend.
Trading Range: Rs 45,760-46,600
MCX Silver futures moved higher on Monday after moving closer to its previous bottom near Rs 59,200 on Friday. Key resistance for price is pegged at Rs 61,675. A sustained move above Rs 61,675 might bring fresh buying interest which might 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 limited downside. Short-term momentum has turned positive as the fast stochastic generated a crossover buy signal. Meanwhile, RSI on the daily chart is hovering near 39, which suggests a bearish bias. However, positive divergence in RSI would support the bulls to take control. To conclude, 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)
Here is a look at how different commodities are behaving in today’s market.
Bullion prices traded steady on Tuesday with spot gold prices at COMEX near $1,750 per ounce while spot silver prices at COMEX flat near $22.60 per ounce. The precious metals are stuck in a range on mixed global cues over US Fed tapering and China’s Evergrande debt crisis. The rise in US bond yields have pressured gold prices to trade weak. The 10-year US Treasury yields rose to 1.48% on Monday. Market players are awaiting for testimony from US Fed chairman and US treasury secretary Jennet Yellen where comments on economic forecast will be crucial. Bullion prices may trade sideways to down for the day.
Trading Strategy: MCX Gold October resistance for the day lies at Rs 46,200 per 10 gram with support at Rs 45,800 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 higher on Tuesday with benchmark NYMEX WTI crude oil prices up 0.87% near $76.11 per barrel. Crude oil prices extended gains for the sixth consecutive day on tighter supply and higher demand outlook. Many nations including Japan are considering to lift COVID-19 restrictions which may boost demand for crude oil. The rally in natural gas prices has also raised demand for crude oil as an alternate fuel. The struggle of OPEC plus nations to meet output quota may remain continuous support for crude oil prices. We expect crude oil prices to trade up for the day.
Trading Strategy: MCX Crude Oil October support lies at Rs 5,560 per barrel with resistance at Rs 5,690 per barrel.
Outlook: Base Metals
Base metals traded mixed with most of the metals in lower trading range. Nickel prices fell the most losing more than 1% on lower demand from China over electricity curbs. More than half of China’s provinces have implemented power cuts to conserve electricity, following a spike in coal prices and a government drive for lower energy consumption. The ease of COVID restrictions in many countries has raised demand prospects for base metals especially copper. Base metals may trade sideways to down for the day.
Trading Strategy: MCX Copper October support lies at Rs 715 and resistance at Rs 727. MCX Zinc October support lies at Rs 256 resistance at Rs 263. MCX Aluminium September support lies at Rs 227 with resistance at Rs 232.
(Tapan Patel is Senior Analyst, Commodities, HDFC Securities. Views are his own)