Commodity strategies: Gold, silver, crude, base metals

By Tapan Patel

Commodity prices traded on a mixed note. While most commodities in the non-agri segment moved higher, bullion witnessed some selling. Crude oil prices rallied on bullish weekly inventory data while base metals extended gains over higher demand prospectus on global economic recovery.

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


Outlook: Bullion
Bullion traded steady with COMEX spot gold near $1,780 per ounce and spot silver flat near $26.50 per ounce in morning deals. Prices held steady in a range, paring their previous losses amid mixed global cues. Gains in US Yreasury yields over Treasury Secretary Jennet Yellen's remarks on rate hikes pressured precious metals. However, the US central bank's stance is clear to keep the monetary policy ultra-easy. Bullion prices are expected to trade sideways to up for the day on mixed global cues.

Trading Strategy
For MCX gold futures (June), resistance lies at Rs 47,300 per 10 grams and support at Rs 46,700 per 10 grams. For MCX silver (May), support lies at Rs 67,500 and resistance at Rs 71,500 per kilogram.

Outlook: Crude Oil
Oil prices traded higher with benchmark NYMEX WTI crude prices rallying more than 2 per cent to $66.24 per barrel in morning deals. Crude oil traded higher on expectations of higher demand with the re-opening of US and European economies. Crude oil prices got a boost from a large weekly inventory draw suggested by American Petroleum Institute. Official weekly inventory data will be released tonight. The large scale vaccination drive in the US and expectations of easing of lockdown restrictions in the UK have improved the demand outlook for oil. Crude oil is expected to trade up for the day.

Trading Strategy
MCX crude oil (May) finds support at Rs 4,830 per barrel and resistance at Rs 4,980 per barrel.

Outlook: Base Metals
Most base metals prices extended gains on Wednesday amid expectations of strong demand on global economic recovery. The easing of lockdown measures in Europe and the US infrastructure boost on account of the stimulus package have boosted buying in industrial metals, especially copper. Improved manufacturing activities and the push for green infrastructure have pushed LME copper prices above $10,000 per tonne. Base metals are expected to trade higher for the day.

Trading Strategy
For MCX copper (May), support lies at Rs 763 and resistance at Rs 772. For MCX zinc (May), support lies at Rs 234 and resistance at Rs 240. For MCX nickel (May), support lies at Rs 1,310 and resistance at Rs 1,360.

(Tapan Patel is Senior Analyst-Commodities at HDFC Securities)

By Ravindra Rao

MCX gold futures stayed higher for most of the session on Tuesday but witnessed some corrective move later. The price has registered a double top near Rs 47,450, which has now become strong resistance. The eight-day moving average is still above the 20 day moving average, which might lend some support. However, the price has closed below both the moving averages, which might keep pressure on the downside. The price needs to break above the eight-day moving average resistance near Rs 47,120 for the bulls to retain strength. Till then, the price might move sideways for the day. Support is seen at Rs 46,700 and strong support near Rs 46,500. Resistance is pegged near Rs 47,120, followed by Rs 47,450.

Trading range for the day: Rs 46,600-47,100

MCX silver also traded in a positive zone for the majority of Tuesday's session, registering a new recent high near Rs 71,400. However, later in the day, the white metal witnessed a sharp fall below the support of Rs 69,500. The price is between the eight and 20-day moving averages, with the eight-day moving average above the 20-day one. This might support the bulls till the support of 20-day moving average near Rs 68,900 holds. Immediate support is placed at Rs 68,900 and strong support at Rs 68,000. MCX silver has resistance near Rs 70,100, followed by Rs 70,800. Momentum indicator RSI is above 50, supporting the bull case. Silver might trade sideways to positive as long as Rs 68,000 holds.

Strategy
Buy MCX silver (July) at Rs 68,900 for a target of Rs 70,400 with stop loss at Rs 68,000

(Ravindra Rao, CMT , EPAT, is VP-Head Commodity Research, Kotak Securities)