Commodity strategies: Gold, silver, crude, base metals

Ravindra Rao

After having fallen in the early session of Monday, MCX Gold Oct futures found support near Rs 45,800 as it rose above last Friday's highs of Rs 46,200. On the daily charts, the price formed a bullish engulfing candlestick pattern, which could restrict the downside. However, the price has to move above Rs 46,400 to confirm the pattern and push the price towards the next resistance at Rs 46,700, followed by Rs 47,000. On the other hand, a move below Rs 45,800 would negate the pattern and price will resume the bearish trend and test Rs 45,635. Momentum oscillator RSI has erased some of its losses and moved above 40. But as it is still below the midline, the upside in price might be capped. So in the near term, price is expected to move in the range of Rs 45,800-46,700 with a sideways bias. Only a close below Rs 45,800 would continue the downtrend and the price might test the next key support at Rs 45,300.

Trading Range: Rs 45,800-46,700

MCX Silver futures continued to trade lower but held the key support levels near Rs 59,200. The trend in silver seems weaker as price is hovering below the previous low support at Rs 61,200, which could be the key resistance for the day. Moreover, the price is moving inside a bearish channel forming a lower high lower-low pattern, which suggests a lower bias. The breakdown of the bear flag could push the price towards the next target support towards Rs 57,900. On the momentum front, RSI has dipped below 30 (27), supporting the weak bias. However, the oversold nature of RSI could bring a pause in the weakness and might trigger some relief rally. On the upside, 8-day EMA could act as resistance for the price at Rs 61,800 following the immediate resistance at Rs 61,200. So for the day, the price might consolidate in the band of Rs 59,200-61,200 with a sideways bias. Only a sustained move below Rs 59,200 would bring fresh selling in silver futures and push it towards Rs 57,900.

Trading Range: Rs 59,200-61,200

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

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 down 0.13% near $1,762 per ounce while spot silver prices at COMEX flat near $22.26 per ounce in morning trade. The precious metals halted decline supported by safe haven buying on China real estate crisis with fall of giant Evergrande. The two-day US FOMC meeting will start today and market players will await for any comments from Fed officials on tapering plans. Weak equity indices may limit downside in bullion prices for the day. Bullion prices may trade sideways to up for the day.

Trading Strategy: MCX Gold October resistance for the day lies at Rs 46,500 per 10 gram with support at Rs 45,800 per 10 gram. MCX Silver December support lies at Rs 58,000 per kg and resistance at Rs 61,500 per kg.

Outlook: Crude Oil
Crude oil prices traded higher on Tuesday with benchmark NYMEX WTI crude oil prices up 1% near $70.84 per barrel in morning trade. Crude oil prices rebounded on Tuesday, gaining above $70 per barrel on US supply concerns. Traders and investors responded to supply tightness in US due to higher demand for oil as compared to gas and coal. However, market players are also assessing potential impact of China Evergrande crisis. We expect crude oil prices to trade sideways to up for the day.

Trading Strategy: MCX Crude Oil September support lies at Rs 5,260 per barrel with resistance at Rs 5,390 per barrel.

Outlook: Base Metals
Base metals prices traded mixed on Tuesday with most of the metals in lower trading range on weak global cues and stronger dollar. Base metals declined on concerns that the debt crisis at Chinese property developer Evergrande could imperil other regional real-estate giants and derail broader economic growth. Nickel prices may limit downside as Indonesia’s plans to ban or tax exports of semi-processed products used to make stainless steel. Base metals may trade sideways to down for the day.

Trading Strategy: MCX Copper September support lies at Rs 698 and resistance at Rs 715. MCX Zinc September support lies at Rs 250 resistance at Rs 256. MCX Aluminium September support lies at Rs 224 with resistance at Rs 230.

(Tapan Patel is Senior Analyst, Commodities, HDFC securities. Views are his own)