Commodity strategies: Gold, silver, crude, base metals

By Tapan Patel

Commodity prices traded weak on Tuesday with most of the commodities in non-agro segment under pressure. Gold prices managed to end in the green with recovery in the last trading session. Crude oil and base metals traded weak on demand concerns and weak equity indices. Here is a look at how different commodities are behaving in today’s market:

Outlook: Bullion
Bullion prices traded firm on Wednesday with spot gold prices at COMEX trading near $1,805 per ounce, while spot silver prices at COMEX trading over half a percent up at $24.80 per ounce in morning trade. Precious metals are fluctuating ahead of outcome of US FOMC meeting and comments from Federal Reserve chairman. The weak Asian equity indices also supported bullion prices. We expect bullion prices to trade sideways to down for the day.

Trading Strategy: MCX Gold Aug resistance for the day lies at Rs 47,900 per 10 gram with support at Rs 47,200 per 10 gram. MCX Silver September support lies at Rs 65,200 per kg, resistance at Rs 67,800 per kg.

Outlook: Crude Oil
Crude oil prices traded firm on Wednesday with benchmark NYMEX WTI crude oil prices trading 0.68% up near $72.14 per barrel in morning trade. Crude oil prices traded higher on expectations of bullish weekly inventory data. The API report on Tuesday showed a draw of 4.7 MB last week. Crude oil prices got support form peak summer season which may reflect in weekly inventory drawdown in the official data released by EIA today. We expect crude oil prices to trade sideways to up for the day.

Trading Strategy: MCX Crude Oil August support lies at Rs 5,280 per barrel with resistance at Rs 5,450 per barrel.

Outlook: Base Metals
Base metals prices traded steady on Wednesday morning as most of the metals halted decline paring some previous losses. Copper and Nickel prices traded firm on strong demand outlook and fall in inventories. Aluminium prices may see gradual upside as global glut is set to reduce with China crackdown on smelters. Base metals have capped upside with fall in equity indices and firm dollar ahead of US FOMC outcome. Base metals may trade sideways to up for the day.

Trading Strategy: MCX Copper August support lies at Rs 756 and resistance at Rs 765. MCX Zinc August support lies at Rs 242, resistance at Rs 248. MCX Nickel August support lies at Rs 1,460 with resistance at Rs 1,510.

(The author is Senior Analyst - Commodities, HDFC securities. Views are his own)