Strategies for commodities: Gold, silver, crude, base metals

Commodities

Summary

Gold prices were trading under pressure on a stronger dollar, while crude oil and base metals were positive about demand growth. Approximately two months ago, the dollar index traded high on vaccine rollouts and optimistic economic results.

Via Tapan Patel

Mixed commodity prices exchanged with most commodities in the non-agro segment ending in orange, with an exception being gold. Gold prices were trading under pressure on a stronger dollar, while crude oil and base metals were positive about demand growth. Approximately two months ago, the dollar index traded high on vaccine rollouts and optimistic economic results. Here is a look at how various commodities in today’s market are behaving.

Outlook: Outlook Bullion

Bullion prices traded lower with spot price of gold at COMEX traded more than half a percent lower at $1821 per ounce, while spot price of silver at COMEX traded lower by 1.83 percent to $26.36 per ounce in the morning trade. Bullion prices are expected to trade with a bearish bias for the day on a stronger dollar, while traders are discounting the effect of the Jobless claims data to be released in the evening session. We expect bullion prices to trade sideways down f.

Trade strategy:

MCX Gold April Day Resistance is Rs. 47,800 per 10 grams with Rs. 47,200 per 10 grams.
MCX Silver March support is at Rs. 65,800 per KG, at Rs. 69,500 per KG.

Outlook: Oil Crude

Crude oil prices traded higher with the benchmark NYMEX WTI crude oil prices traded half a percent to $55.95 per barrel on Thursday. Crude oil prices are gaining lower supply fears after OPEC plus nations have pledged to keep output cuts in line to overcome oil market surpluses. Crude oil prices were also supported by a steady decline in US inventories and a cap on US shale output. Crude oil prices are expected to trade sideways at positive global rates for the day…

Trade strategy:

The support for MCX Crude Oil February lies at Rs. 4,030 per barrel with resistance at Rs. 4,140 per barrel.

Outlook: the basic metals

Base metals complex traded under pressure on a stronger dollar and expectations of lower demand for Chinese holidays. The seasonal effect of holidays on manufacturing activities has reduced the outlook for demand in the short term. The slower pace of economic recovery and cash tightening may limit upside down in base metals until mid-February. However, tighter supplies may encourage copper prices to reduce the downside. Base metals are expected to trade sideways down.

Trade strategy:

MCX Copper February is supported by Rs. 592 and Rs. 598.
MCX Zinc February support is at Rs. 205, resistance at Rs. 212.

The support for MCX Nickel February lies at Rs. 1,260 with resistance at Rs. 1,295.

(Tapan Patel is a senior analyst at HDFC Securities)

Ravindra Rao’s

MCX Gold April futures is consolidated in the range of Rs 47,500-48,300 following infringement of the key support of EMA 200 days at Rs 48,500. Meanwhile, key support for the future of April below Rs 47,500 (Previous Bottom) exists around Rs 47,200. On the other hand, the price faces resistance of 5 days EMA (48,300) and Rs 48,500. (200 DEMA). On the momentum front, RSI is trading close to 30, suggesting a trend weakness. However, the oversold condition in gold could reduce the price downside further. For the day, prices are likely to continue trading in a wide range of Rs 47,500-48,300 with a sideways bias. Only a sustained move below Rs 47,200 would increase the downside.

Strategy of the following:

Buy MCX Gold April at Rs 47,450 with a target of Rs 47,800 and a stop loss of Rs 47,200.

MCX Silver March futures remained in a sideways trend following its decline from the higher band of the rising channel. Meanwhile, prices are still trading on a large rising trend channel with lower bound support close to Rs 66,400, followed by Rs 65,050. (Recent Bottom). On the other hand, the key resistance is around Rs 71,500. On the momentum front, RSI moved towards the midline (52) after hitting the overcrowded zone. This indicates the price to go further under consolidation.

Strategy of the following:

Buy MCX Silver March on Rs 67,300 with a target of Rs 70,400 and a stop loss on Rs 66,200.