Commodity strategies: Gold, silver, crude, base metals

Ravindra Rao

Gold futures rallied significantly on Monday as it held support of 8-day EMA and moved above the 50-day EMA at Rs 47,400. It also tested the key resistance of 200 day-EMA at Rs 47,600, which is the key resistance zone in near term. Now the price has to sustain above the 200-DEMA to extend its rebound towards Rs 47,800-48,000 zones. On the flipside, if it fails to hold the support of 8-day EMA at Rs 47,140, it might erase the gains and price might test the key supports at Rs 46,750-46,600 zone. On the momentum front RSI has moved above the neutral zone (50) at 54, suggesting a sideways to higher trend. Going by the above evidences, the price might move in the range of Rs 47,140-47,800 with a sideways to higher bias.

Buy MCX Gold Oct at Rs 47,350. Target: Rs 47,800. Stop loss: Rs 47,100

MCX Silver futures surged the most on Monday as weakness in the dollar index supported the recovery. Price has moved above the initial hurdle of 8-day EMA. The next key resistance is seen around Rs 64,200 (20-DEMA). Price has to move above Rs 64,200 to confirm the reversal in the down trend, which would push the price towards Rs 65,500. The short-term momentum has turned positive as the fast stochastic generated crossover buy signal. On the RSI front, positive divergence on short-term charts has also supported the recovery in price. On the downside, Rs 61,900 and Rs 61,200 hold key supports for the day. So as long as Rs 61,200 holds, the price is expected to move towards Rs 64,200. Only a sustained move above Rs 64,200 would bring fresh buying interest in silver and push it towards Rs 65,500.

Buy MCX Silver Sep at Rs 62,250. Target price: Rs 64,200. Stop loss: Rs 61,200

(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 steady on Tuesday with spot gold prices at COMEX trading near $1,802 per ounce while spot silver prices at COMEX trading at $23.58 per ounce in morning trade. The precious metals reported strong long run on Monday supported by dollar decline and Covid worries. The dollar index fell to 93 mark, pushing dollar denominated commodities higher. Bullion prices also added premium over rising virus cases in major economies which may hurt growth sentiments. We expect bullion prices to trade sideways to up for the day on mixed global cues.

Trading Strategy: MCX Gold October resistance for the day lies at Rs 47,800 per 10 gram with support at Rs 47,200 per 10 gram. MCX Silver September support lies at Rs 61,500 per kg and resistance at Rs 63,800 per kg.

Outlook: Crude Oil
Crude oil prices traded up on Tuesday with benchmark NYMEX WTI crude oil prices trading 0.17% up near $65.75 per barrel in morning trade. Crude oil prices extended Monday gains on full approval of US vaccines which improved fuel demand outlook. The US drug regulator granted full approval to the Pfizer Inc/BioNTech SE COVID-19 vaccine. We expect crude oil prices to trade sideways to up for the day.

Trading Strategy: MCX Crude Oil September support lies at Rs 4,810 per barrel with resistance at Rs 4,960 per barrel.

Outlook: Base Metals
Base metals prices traded steady in the opening trade with marginal gains in zinc and lead. Base metals witnessed strong buying on Monday which pared some of the previous week’s losses supported by weaker dollar. Copper prices gained on supply disruption fears from Chile over possible labour strike. Plant workers at Codelco’s Andina copper mine rejected management’s latest wage offer, prolonging a stoppage at the central Chilean operation. Base metals may trade sideways to up for the day.

Trading Strategy: MCX Copper August support lies at Rs 702 and resistance at Rs 715. MCX Zinc August support lies at Rs 245, resistance at Rs 250. MCX Nickel August support lies at Rs 1,410 with resistance at Rs 1,460.

(Tapan Patel is Senior Analyst, Commodities, HDFC Securities)


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