Commodity strategies: Gold, silver, crude, base metals

Commodity prices traded mixed on Tuesday. Bullion and base metals traded higher on broader dollar weakness, while crude oil prices traded lower on OPEC uncertainty and inventory build. Bullion prices witnessed strong recovery with fall in treasury yields despite the rally in equity indices. The dollar index ended more than half a percent down for the day.

Here is a look at how different commodities are behaving in today’s market.

Outlook: Bullion

Bullion prices traded weak on Wednesday with spot gold prices at COMEX trading marginally down near $1,809 per ounce and spot silver prices at COMEX down by 1.50 per cent to $23.64 per ounce in morning. Bullion prices pared previous gains over stimulus hopes as vaccine optimism continued to boost investment in riskier assets. The record gains in US equities and positive economic data may cap the upside in bullion prices for the day.

Trading Strategy: MCX Gold February resistance for the day lies at Rs 48,700 per 10 gram with support at Rs 47,900 per 10 gram. MCX Silver March support lies at Rs 61,500 per kg, resistance at Rs 63,800 per kg.

Outlook: Crude Oil
Crude oil prices traded lower on Wednesday as benchmark NYMEX WTI crude oil were trading down to $44.20 per barrel in the morning trade. Crude oil prices extended decline ahead of official inventory data after API report showed buildup of 4.14 million barrels. The uncertainty over OPEC plus meeting after previous disagreement has also pressurised oil prices over higher supply concerns. The delay in decision making has pushed oil prices lower over concerns of rising virus worries amid lower demand. Crude oil prices are expected to trade sideways to down for the day.

Trading Strategy: MCX Crude Oil December support lies at Rs 3,190 per barrel, with resistance at Rs 3,320 per barrel.

Outlook: Base Metals
Base metals traded mixed on Wednesday with most of the metals trading muted near the recent highs. Copper prices continued a bullish stance amid strong demand optimism over vaccine hopes. Higher prices have increased scrap supplies, capping upside for the day. Zinc prices witnessed minor recovery after losing more than 1 per cent in previous trading. Base metals are expected to trade with a positive trend on stimulus hopes while the risk-on sentiments on vaccine hopes will support base metals to trade higher with strong equity indices.

Trading Strategy: MCX Copper December support lies at Rs 581 and resistance at Rs 590. MCX Zinc December support lies at Rs 213, resistance at Rs 221.

(Tapan Patel is a Senior Analyst (Commodities) at HDFC securities)